Inflation nears 3% in August but economists point to 'deflationary forces'
Sep 13 2017
The corresponding provisional inflation rate for rural area was 3.30% and urban area 3.35% in August 2017 as against 2.41% and 2.17% in July 2017.
United Kingdom inflation measured by the Consumer Prices Index rose to 2.9% in August, up from 2.6% in July, figures show.
Food prices in August climbed 1.52% from a year earlier, rebounding from a 0.36% decline in July, according to the data. Economists polled by Reuters had expected August retail inflation at 3.20 per cent, with forecasts ranging from 2.50 per cent to 3.55 per cent. Monsoon rains this year have caused damages to crops of some perishable food items and hindered movement of goods.
There was upward pressure on clothing and fuel prices for the month and there was wider upward pressure on finished goods prices for the month. Meanwhile, the cost of motor fuels and air fares had a "large upward effect", with petrol prices rising 1.8p per litre. The RBI's next policy meeting is on October 3-4.
Peter Dowd, Labour's shadow chief secretary to the Treasury, said: "The continued rise in inflation will come as further bad news for working families; who after 7 years of Tory economic failure have seen their wages fail to keep up with prices". The year-on-year rate increased to 2.9% from 2.6% previously and was also above market expectations of a more modest increase to 2.8%. That suggests traders are more confident of a rate hike, soon.
On a monthly basis, consumer prices grew 0.6 percent in August, just above the 0.5 percent gain expected by economists.
While overall inflation is on the rise, wage growth in Britain has stalled, with some analysts putting the blame partly on Brexit uncertainty, which has seen companies hold back from hiring.