Unforeseen rise in inflation seen as temporary

The UK inflation rate saw an unexpected rise last month, increasing 2.7 per cent to hit the highest level in six months.

This compared to economists’ expected Consumer Prices Index rate of 2.4 per cent.

Rising prices for recreational goods, transport and clothing drove the rise.

The pound rose after the data was released by the Office for National Statistics.

Wages are still rising more than inflation, with data last week showing wages, excluding bonuses,grew by 2.9 per cent in the three months to July.

In July, CPI was 2.5 per cent, which had been the first jump in the index since November.

Mike Hardie, head of inflation at the ONS, said: “Consumers paid more for theatre shows, sea fares and new season autumn clothing last month.

“However, mobile phone charges, and furniture and household goods had a downward effect on inflation.”

Some analysts attributed the rise to ephemeral factors.

“Given the likely temporary nature of August’s pickup in inflation, we would not view it as vindication of the Monetary Policy Committee’s (MPC) decision to hike interest rates. And with inflation likely to drop back as we move through next year, we continue to expect a maximum of one 25 basis points rate hike in 2019.”