The cost of living jumped by the largest amount on record last month as pandemic chaos caused prices to rise.
Inflation rose from 2 per cent in July to 3.2 per cent in August, according to the Office for National Statistics (ONS) – the biggest spike since 1997.
It will spark fears that it could run out of control and put pressure on the Bank of England to raise interest rates.
Rising prices: Inflation rose from 2 per cent in July to 3.2 per cent in August, according to the Office for National Statistics
The Bank slashed rates to a record low of 0.1 per cent last year to encourage spending, and injected cash into the economy via a £895billion money-printing programme.
But the ONS urged caution in interpreting the reading, pointing out that it is calculated by comparing today’s prices to those during an unusual period a year ago.
In August 2020, it was much cheaper to go out for lunch and dinner due to the Eat Out to Help Out scheme cutting restaurant bills in half.
Sarah Coles, an analyst at Hargreaves Lansdown, said: ‘It was given a significant shove by the scheme, which will drop out of the figures next month.’
The ONS said prices of food, furniture and household equipment, and recreation and cultural activities were also up.
Inflation is likely to rise further due to an increase in the energy price cap, and the end of the VAT cut for hospitality firms.
The Bank expects soaring inflation to be temporary. Thomas Pugh, at accountant RSM, said: ‘The way back down the inflation mountain should be just as quick.’
Because of temporary factors, the Bank is not expected to start raising interest rates until next year.
https://news.google.com/__i/rss/rd/articles/CBMiX2h0dHBzOi8vd3d3LnRoaXNpc21vbmV5LmNvLnVrL21vbmV5L25ld3MvYXJ0aWNsZS05OTk0OTExL0luZmxhdGlvbi1yaXNlcy1mYXN0ZXN0LXJhdGUtMTk5Ny5odG1s0gFjaHR0cHM6Ly93d3cudGhpc2lzbW9uZXkuY28udWsvbW9uZXkvbmV3cy9hcnRpY2xlLTk5OTQ5MTEvYW1wL0luZmxhdGlvbi1yaXNlcy1mYXN0ZXN0LXJhdGUtMTk5Ny5odG1s?oc=5
2021-09-15 20:51:02Z
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