LONDON — Inflation jumped to its joint highest level since the vote to leave the EU in August, as Brexit continues to push up the cost of living in the UK.
The Office for National Statistics said in its latest release that the UK’s Consumer Prices Index (CPI) inflation rate — the key measure of inflation — was 2.9% in August, up from 2.6% in the previous month.
Inflation had been expected to climb to 2.8% from the 2.6% level seen in both June and July, according to economists polled before the release.
CPI measures the weighted average of prices of a basket of goods and services, such as food, transportation, and medical care.
CPIH, a measure which includes costs associated with maintaining a home — and which the ONS cites as a more useful indicator of living costs than CPI — was at 2.7%, also up from 2.6% at the last reading.
The chart below illustrates the sharp rise in inflation following last year’s Brexit vote. OOH represents owner occupiers’ housing costs, which measures the cost of owning, maintaining, and living in one’s own home:
The sharp fall in the value of the pound following the UK’s vote to leave the EU last year has raised the cost of imports and pushed up the rate of inflation. Inflation is expected to peak at more than 3% at some point in 2017, according to the latest Bank of England forecasts.
More follows …