12/08/2008
UK Inflation Rises To 4.4%
The UK's annual rate of inflation has risen to 4.4% - which is twice the Government's target, according to the Office for National Statistics (ONS).
The rise in the Consumer Prices Index (CPI) is more than expected with food prices rocketing to 13.7% on the year.
The ONS said that the 0.6 % leap in the annual rate is the "highest monthly change since records began in 1997".
It is understood that high petrol prices will have helped push inflation up as the data was collected before the recent drop in oil prices.
There were also increases in bread and cereals with an increase of 15.9% on the year and an increase of 11.1% in vegetables including potatoes, on the year.
Air passenger transport was a significant contributor too, rising 5.4% year on year in June to 8.9% in July. Fares rose by more than last year particularly on European routes.
Electricity, gas and other fuels saw an increase in the annual rate from 13.8% to 16.1%.
Retail prices index (RPI) inflation rose to 5% in July, up from 4.6% in June.
The ONS said: "As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in June, at 3.8%, was below the provisional figure for the European Union as a whole of 4.3%."
The latest figures are expected to make the next interest rate decision by the Bank of England's Monetary Policy Committee even tougher.
Philip Shaw, Investec Chief Economist said: "It is very disappointing data with widespread signs of higher price pressures.
"It will undoubtedly convince some members of the Monetary Policy Committee to vote for higher rates but we doubt they will reach a majority."
The figures cast further gloom on the UK economy which is already reeling under the burden of the housing market slump, falling retail sales and rising unemployment.
The ONS will next publish figures in 16 September.
(DS)
The rise in the Consumer Prices Index (CPI) is more than expected with food prices rocketing to 13.7% on the year.
The ONS said that the 0.6 % leap in the annual rate is the "highest monthly change since records began in 1997".
It is understood that high petrol prices will have helped push inflation up as the data was collected before the recent drop in oil prices.
There were also increases in bread and cereals with an increase of 15.9% on the year and an increase of 11.1% in vegetables including potatoes, on the year.
Air passenger transport was a significant contributor too, rising 5.4% year on year in June to 8.9% in July. Fares rose by more than last year particularly on European routes.
Electricity, gas and other fuels saw an increase in the annual rate from 13.8% to 16.1%.
Retail prices index (RPI) inflation rose to 5% in July, up from 4.6% in June.
The ONS said: "As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in June, at 3.8%, was below the provisional figure for the European Union as a whole of 4.3%."
The latest figures are expected to make the next interest rate decision by the Bank of England's Monetary Policy Committee even tougher.
Philip Shaw, Investec Chief Economist said: "It is very disappointing data with widespread signs of higher price pressures.
"It will undoubtedly convince some members of the Monetary Policy Committee to vote for higher rates but we doubt they will reach a majority."
The figures cast further gloom on the UK economy which is already reeling under the burden of the housing market slump, falling retail sales and rising unemployment.
The ONS will next publish figures in 16 September.
(DS)
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