British inflation hit a greater than nine-year excessive final month after the most important month-to-month leap within the annual charge in at the least 24 years, largely on account of a one-off enhance reflecting the “Eat Out to Help Out” scheme that pushed down restaurant meal costs final yr.
Consumer costs rose by 3.2% in annual phrases final month after a 2.0% rise in July, the very best charge since March 2012, the Office for National Statistics stated.
The 1.2 proportion level rise within the annual charge of inflation within the house of a month marked the sharpest such enhance since detailed data began in 1997.
A Reuters ballot of economists had pointed to a studying of two.9% for August.
“Much of this (increase) is likely to be temporary as last year restaurant and café prices fell substantially due to the ‘Eat Out to Help Out’ scheme, while this year prices rose,” stated ONS statistician Jonathan Athow.
Initial market response to the information was restricted.
In August 2020 the federal government provided diners up a 50% low cost of as much as 10 kilos ($13.82) per head on meals between Mondays and Wednesdays to kick-start the financial system and encourage individuals to spend cash once more after the pandemic lockdown.
Restaurant costs represented greater than half of the 1.2 proportion level rise in headline inflation final month.
Still, the sharper-than-expected rise in inflation will probably be seen by Bank of England policymakers who’re weighing up whether or not to name an early finish to the stimulus plan launched on the top of the COVID-19 pandemic final yr.
“Higher inflation will inevitably raise questions for the Bank of England on the timing of tightening monetary policy and interest rate hikes to contain inflationary risks further down the line,” stated Yael Selfin, chief economist at KPMG UK.
“However, any tightening now risks scuppering the recovery before it has a chance to take hold, so a delay until the middle of next year is likely.”