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UK inflation strikes nine-year peak as economy reopens

·1-min read
Global markets have seesawed this year over concerns that central banks will end pandemic support measures to tame inflation (AFP/Tolga Akmen)

British annual inflation spiked in August to a nine-year peak on the reopening economy, while last year's figure had been skewed by a restaurant discount scheme, data showed Wednesday.

The Consumer Prices Index (CPI) soared to 3.2 percent, the highest level since March 2012, the Office for National Statistics said in a statement.

That marked a record acceleration and compared with 2.0 percent in July, and comes after the Bank of England warned inflation would strike 4.0 percent this year -- double its target -- as a result of Covid fallout.

Global markets have seesawed this year over concerns that central banks will end pandemic support measures to tame inflation, but policymakers have insisted that the rising prices are temporary.

"August saw the largest rise in annual inflation month on month since the series was introduced almost a quarter of a century ago," said ONS statistician Jonathan Athow.

"However, much of this is likely to be temporary as last year restaurant and cafe prices fell substantially due to the 'Eat Out To Help Out' scheme, while this year prices rose."

Inflation in August 2020 had been depressed by the discount scheme and temporary tax cuts aimed at boosting the Covid-hit economy.

The ONS added that raw materials surged 11 percent in the year to August, up from 10.4 percent in July.

UK economic recovery is flattening as a result of the pandemic, global supply chain bottlenecks and the elevated cost of commodities.

The economy grew at just 0.1 percent in July compared with 1.0 percent in June, recent data showed.

rfj/lth

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