United Kingdom inflation RISES for first time in 2018 - ‘Cost of living SQUEEZE’

Andrew Cummings
August 16, 2018

According to the bureau, the drop was the first month-on-month headline inflation decline since February 2018.

The rise in inflation was partly due to the increased cost of video games in the United Kingdom, as well as higher transport fares.

On Tuesday, the Office for National Statistics said that average earnings, excluding bonuses, rose by 2.7% for the three months to June.

The apex bank has rebuffed clamour for reduction and sustained the Monetary Policy Rate (MPR) at 14 per cent, citing inflation and fragile macroeconomic environment.

The rise in inflation follows a decision by the Bank of England to raise interest rates to the highest level since 2009, putting more pressure on the cost of borrowing.

House prices in June rose by an annual 3.0 percent across the United Kingdom as a whole, the weakest increase since August 2013.

John Hawksworth, chief economist at PwC, said real household income growth will remain "subdued" over the next year.

The CSO data revealed that inflation in vegetables declined by (-) 2.19 percent last month, compared to 7.8 percent in June.

Within the index, food category inflation was 1.73% in July, easing from 3.11% in June.

Tej Parikh, senior economist at the Institute of Directors, said the rise in inflation showed the cost of living squeeze was not yet a thing of the past. However for eggs, cereals and products as also oil and fats the rate of price rise was higher than in June.

In July 2018, food inflation on a year-on-year basis was highest in Abuja (15.85%), Bayelsa (15.75%) and Imo (15.46%), while Plateau (9.40%), Bauchi (10.44%) and Kano (10.50%) recorded the slowest rise in food inflation. Years of steady house price hikes have created huge affordability issues for first-time buyers, so the fact that annual house price growth has fallen to its lowest point in five years will be a welcome change for many.

The prices of clothes and footwear fell by as much as 3.7 percent month on month, coinciding with the summer sales period on the high street.

And Samuel Tombs at Pantheon Macroeconomics added: "Unless inflation in the services sector strengthens dramatically, CPI inflation will fall below the 2 percent target in the first half of next year".

Other reports by iNewsToday