Tuesday 12, September 2017 by William Mullally

August inflation rates are in

Mihir Kapadia, CEO and Founder, Sun Global Investments

The August inflation figures has clocked in 2.9 per cent once again, up from 2.6 per cent in July, and matching the four year high of 2.9 per cent in May. This was a point higher than the 2.8 per cent expected by markets. The high inflation figure once again substantiates the massive gap between rising costs and falling pay, as the average earnings only rose by 2.1 per cent in the three months to June. This means that the inflation is fast eating into any wage growth, thus causing pressures for  consumers.

The weak pound at least against the Euro, weighed down by its own problems from the hazy Brexit negotiations, is causing inflationary pressures by driving up the costs of imports. In the near term, the pound is expected to add further pressure, as the Euro is threatening to reach parity with the sterling, as investors await the ECB’s decision on stimulus in October.

Inflation in the UK is expected to peak at more than 3 per cent at some point in 2017, according to the latest Bank of England forecasts, which means we may be subjected to tougher times ahead.

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