Inflation climbs to 3.1% as fuel and transport costs bite
Consumer prices rose 3.1 per cent in the year to August, up from 2.9 per cent in July, with transport inflation running at 4.6 per cent.
Consumer price inflation rose to 3.1 per cent in the year to August, up from 2.9 per cent in July, according to the Office for National Statistics, driven in large part by rising transport and fuel costs.
Prices rose 0.5 per cent on the month. Transport inflation reached 4.6 per cent, while services inflation, the measure the Bank of England watches most closely for signs of persistent price pressure, stood at 3.4 per cent. Core CPI, which strips out volatile food and energy prices, was 2.6 per cent.
The figures, published by the ONS in its August consumer price inflation bulletin, confirm that the path back to the Bank’s 2 per cent target remains uneven. Fuel prices, which feed into both household budgets and business costs, were the single largest driver of the monthly increase.
At 3.1 per cent, inflation is far from the double-digit peaks of recent years, but it is moving the wrong way for the Bank of England.British Journal analysis
For the Monetary Policy Committee, which held Bank Rate at 3.75 per cent in September with three members voting for a rise to 4 per cent, the August data vindicates the hawks’ unease. Markets will now look to the September inflation figures, due next month, for evidence of whether the August rise was a blip or a trend.
For households, the practical effect is at the till and the pump. With regular earnings growing at 3.5 per cent, pay is still outpacing prices on average, but the margin is narrowing, and it is narrowing fastest for those who drive to work.
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