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UK inflation jumps to 4.4% in July

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by Kay Mitchell

The Office for National Statistics (ONS) today announced Consumer Price Inflation (CPI) rose to annual rate of 4.4% last month after easing to 4.2% in June.

Analysts had expected the figure to rise slightly to 4.3%.

Higher inflation continues to be led by rising food costs – which grew by 6.2% in July, while clothes prices increased by 3.1% – the most since records began in 1997.

UK inflation continues to remain more than double the target of 2% and has been above this level since December 2009 and is expected to remain above target during 2012.

The latest figure has now prompted Bank of England Governor, Mervyn King, to write a letter to Chancellor George Osborne to explain why inflation remains above target.

The letter will be published at 10:30 a.m.

The Bank of England has previously warned that inflation could reach 5% later this year, driven higher by rising energy and food costs but should return to target by 2013.

Meanwhile, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis for many wage deals, remained unchanged at 5% in July, said the ONS.

Inflationary pressures are rife throughout the world, particularly in Asia, and many central banks have opted to lift interest rates to combat stubbornly high inflation.

However, the Bank of England continues to maintain rates at the historic low of 0.5%, suggesting it is reluctant at this stage to lift interest rates as it could be harmful to the economic recovery.

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News posted: August 16, 2011

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