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UK inflation unexpectedly accelerates on theatre prices, fares

Sep 19 2018 11:30
Lucy Meakin, Bloomberg

UK inflation unexpectedly accelerated to a six-month high in August, boosted by the cost of theatre shows, computer games, transport fares and clothing.

Annual consumer-price growth quickened to 2.7% from 2.5% in July, the Office for National Statistics said on Wednesday. The median forecast in a Bloomberg survey was 2.4%.

Upward pressure came mainly from the recreation and culture sector, where prices jumped 3.6%, the most since 2010. There were offsetting influences from furniture prices, auto fuels and mobile-phone charges.

The figures may raise questions about how quickly inflation will return to target. The Bank of England raised interest rates last month to tame emerging price pressures and some economists were expecting inflation to slow to the 2% target by year end, earlier than officials forecast in August.

The pound jumped 0.5% to $1.3208 after the data.

Money markets see no further rate hikes before Britain leaves the European Union in March, with the next increase tentatively priced in for May. But all bets would be off if Britain crashes out of the bloc without a deal.

Core inflation, which excludes volatile food, energy, tobacco and alcoholic drinks, rose to 2.1% August.

The pickup is bad news for British workers, whose wages are still barely outstripping the rate of inflation. Real wages remain below their levels before the financial crisis.

Producer input prices rose 0.5%, taking the annual rate of increase to 8.7%. Output prices rose 2.9% on the year.

House price growth slowed to 3.1% in July. The worst-performing region was London, where prices fell 0.7%, the biggest drop since September 2009.

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uk  |  inflation  |  economy
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