// The UK’s consumer prices index surged by 3.2% in the 12 months to August
// The rate now exceeds the Bank of England’s 2% inflation target again
The UK inflation rate has hit 3.2 per cent in August, from 2 per cent in July, the biggest increase since records began in 1997, as the economy continued to reopen.
The Office for National Statistics, which published the data, said the surge was “likely to be a temporary change” and said the U.K. government’s “Eat Out to Help Out” program last year may have accentuated the jump.
“In August 2020 many prices in restaurants and cafes were discounted because of the government’ (EOHO) scheme, which offered customers half-price food and drink to eat or drink in (up to the value of £10) between Mondays and Wednesdays,” the ONS said in a statement.
“Because EOHO was a short-term scheme, the upward shift in the August 2021 12-month inflation rate is likely to be temporary.”
The rate now exceeds the Bank of England’s 2% inflation target again.
The cost of living went up less rapidly in July because of lower clothing and footwear prices.
Ruth Gregory, senior UK economist at Capital Economics, told BBC Radio 4’s Today Programme that price rises seen in August were “almost unavoidable” because of the discounts available last year.
“Inflation, which is a year-on-year comparison, was always going to look strong compared to last year,” she said.
“Some of that rise reflected genuine factors too. In particular, we are now seeing the effects of higher global shipping costs and shortages of staff driving up food price inflation.”