UK inflation up to 4.7% in August

Posted by admin on 16 September, 2008 under Business news | Be the First to Comment

The UK’s annual rate of inflation has risen to 4.7% in August, up from 4.4% in July.

Bank of England Governor Mervyn King will now have to write a letter to the chancellor explaining why inflation is higher than the government’s 2% target.

Higher energy and food bills sent the Consumer Price Index (CPI) higher, the Office for National Statistics said.

Inflation as measured by the Retail Prices Index (RPI) – often used in pay negotiations – fell to 4.8% from 5%.

The Bank of England’s Monetary Policy Committee has not been able to consider a cut in interest rates to boost the flagging UK economy while inflation keeps rising.

But with the sharp fall in oil prices over the past month from their high of close to $150 a barrel, some analysts are optimistic that inflation could be near its peak.

“This latest inflation figure, coupled with the recent moves in energy prices, could be an indication of inflation nearing its peak,” said Richard Hunter, an analyst at stockbrokers Hargreaves Lansdown.

He added: “This in turn could lead to a loosening of monetary policy by way of an interest rate cut in the UK, at a time when the markets are eagerly seeking signs of recovery.”

News reported by The BBC