(ONS) The U.K. consumer price index jumped by 3.2% in the year to August 2021, the largest increase on record since 1997. The gain was higher than expected 2.9% and above a 2.0% surge posted in the year to July.
The increase in annual inflation was mainly fueled by a 4.9% surge in prices of used cars, which propelled the component’s inflation rate to 18.3%.
The inflation reading, which is above the Bank of England’s 2% target, is expected to add pressure to the central bank in ending the pandemic-era stimulus policies.
U.K.’s office for National Statistics still insisted that the unprecedented surge in inflation was temporary, blaming the government’s “Eat Out to Help Out” program for the jump.
Analysts say the CPI is unlikely to rise again in September, since restaurant prices had rebounded at a similar period last year. An increase in energy price cap and tax levy in the tourism industry is projected to cause a CPI jump in October.
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