UK Inflation Accelerates More Than Forecast

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Wholesale prices are expected to rise 3 per cent in August from a year ago, from 1.88 per cent in July, according to the Reuters poll.

The Consumer Price Index (CPI) or retail inflation, as it is more commonly known, rose 3.36 per cent in August from a year earlier, government data showed on Tuesday.

The ONS said motor fuels and clothing were the main contributing factors to the rise, although air fares also edged up during the month.

The weaker level of the pound was behind the continued rise in clothing prices, as it's become more expensive for importers to bring clothing to the United Kingdom from overseas.

Meanwhile, a renewed fall in sterling and increasing commodity prices also impacted. "Economists have suggested that now is finally the time that the Bank takes a more hawkish turn, after eight and a half years of ultra-loose policy", said Maike Currie, investment director for personal investing at Fidelity International.

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Today's numbers are up from the 2.6% level of inflation, which was recorded in the previous figures for both July and June. Mark Carney will certainly be hoping so, as it will save him the trouble of writing to the Chancellor to explain himself. "All in all, I see more deflationary forces than inflationary in the world economy at present".

The rate however is still below the Reserve Bank of India's (RBI) medium-term target of 4 per cent.

The inflation for housing increased to 5.58%, while that for miscellaneous items was higher at 3.85% in August 2017.

"The combination of this along with high levels of debt, creates the threat of deflation - the stuff of nightmares for central bankers - and explains why they remain so cautious to "normalise" monetary policy at present".