ANNUAL UK inflation rose unexpectedly above the Bank of England’s two per cent target in July, official data showed yesterday, confounding economists who had forecast a fall.
The Office for National Statistics said yesterday that annual UK consumer prices index inflation had risen from 2% in June to 2.1% in July.
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The consensus forecast was that annual inflation would have fallen to 1.9% last month.
Sterling failed to finish higher against the dollar in the wake of the stronger-than-expected inflation data, as fears of a no-deal Brexit continued to weigh. Worries over a no-deal departure from the European Union have grown significantly since Boris Johnson’s ascension to Prime Minister.
The pound was, at 5pm, trading around $1.2067, unchanged from its close in London on Tuesday.
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David Madden, analyst at CMC Markets, said: “Sterling can’t catch a break because of Brexit jitters.”
Howard Archer, chief economic adviser to the EY ITEM Club think-tank, described the inflation data as “slightly disappointing news for consumer purchasing power and for the Bank of England”.
Upward pressure on the annual inflation rate in July came from the recreation and culture category, with the largest effect within this group coming from games, toys and hobbies, notably computer games and consoles. Prices of games, toys and hobbies rose by 8.4% overall between June and July, having increased by only 4.1% between the same two months of last year.
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Overnight hotel accommodation prices also put upward pressure on the annual inflation rate. Clothing and footwear prices also had an upward effect on inflation.
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