United Kingdom Inflation August 2016

United Kingdom

Inflation stable in August

In August, consumer prices increased 0.3% over the previous month, which contrasted the 0.1% drop seen in the previous month. August’s figure marked the highest reading in five months. The increase reflected higher prices for transportation and restaurants and hotels.

Inflation was 0.6% in August, which matched the previous month’s reading, thus remaining at the highest level in over a year. The reading came in below the 0.7% expected by the markets. Finally, annual average inflation inched up from 0.2% in July to 0.3% in August, the highest figure in a year.

In August, the Bank of England cut its Base Rate for the first time since March 2009 in order to safeguard for the economy and offset some of the negative effects of the Brexit vote. The move will also put upward pressure on inflation. The BoE sees inflation averaging 1.3% in Q4 2016 and 2.1% in Q4 2017. FocusEconomics Consensus Forecast panelists expect inflation to average 0.7% in 2016, which is down 0.1 percentage points from last month’s forecast. For 2017, the panel forecasts that inflation will average 2.2%.

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United Kingdom Inflation Chart

United Kingdom Inflation August 2016

Note: Annual and monthly variation of consumer price index in %.
Source: Office for National Statistics (ONS) and FocusEconomics calculations.

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