14 September, 2017
Prices in all broad categories were in August 2017 than a year ago, the data showed, and there were rises in all measures of inflation, including producer input prices, showing inflationary pressures continue to build.
"The Bank of England will decide on Thursday whether to raise rates in order to curb inflation with today's higher-than-expected pick-up cranking up the pressure on the central bank's policymakers", The Daily Telegraph reports.
Likewise, prepared meals, snacks and candies as a category turned dearer with the rate of price rise at 1.96 per cent from 0.43 per cent in July.
Last month, two of the nine-member Monetary Policy Committee voted to increase interest rates from their record-low of 0.25%.
Separately, annual industrial output INIP=ECI grew at 1.2 percent in July, in line with the forecast by economists in a Reuters poll, the data showed.
Inflation had been expected to climb to 2.8% from the 2.6% level seen in both June and July, according to economists polled before the release. The rate rose for the first time in six months, after peaking at 3.7% in February and March. The current rate of inflation is the highest in five months.
On the news, the pound also went up against the dollar by 0.7 per cent, while it went up by 0.6 per against the euro. Clothing and footwear prices are up by 4.6%, the biggest increase for at least a decade.
"August's reading is likely to frustrate that notion, with a small tick-up expected".
Clothing and footwear was one of four sub-sectors of the ONS's basket of goods that saw price growth reach a four-year high last month. The cumulative growth in IIP for the period April-July 2017 over the corresponding period of the previous year stands at 1.7 per cent. The trend growth in Apr-Jul was 1.8 per cent this year, DBS added.
The pound jumped to near year-highs against the dollar, a signal that some traders, at least, think that borrowing rates could be heading higher later this year or early next.
"And if you combine this with the fact that CPI inflation has also started to rise, the economy is still not out of the woods", Mr. Srivastava added. The BoE has shown patience with above target CPI prints, however some reduction in the dovish bias and a move towards a more neutral or even a few hawkish comments is now expected by the market.