United Kingdom inflation rises further above Bank of England's target

Household goods and services inflation was 4.24%. The last time inflation was higher than 2.9% was in April 2012.

Excluding energy, food, alcoholic beverages and tobacco, core inflation rose to 2.7 percent in August from 2.4 percent in the prior month.

At Bloomberg Intelligence, Dan Hanson and Jamie Murray expect Brexit uncertainty to increasingly weigh on growth and the labor market, leading the BOE to keep rates on hold until 2019.

However, MPC members have warned market participants that their future interest rate projections remain too low, suggesting that investors are underestimating the risk of a rate rise.

The current rate of inflation is the highest in five months.

The Bank of England is set to announce its latest policy decision on Thursday.

Retail price inflation, which is rarely used as an official measure of price rises, rose to an annual rate of 3.9% from 3.6%.

The year-on-year change in average weekly earnings, from July 2016 to July 2017.

August's inflation rate is far above the Bank of England's target of 2%.

The drop in the value of the pound since the Brexit referendum in June previous year boosted import prices, which partly fueled price growth for household items.

The ONS said motor fuels and clothing were the main contributing factors to the rise, although air fares also edged up during the month.

Inflation rose to 2.36 percent in July, after falling for three straight months.

"Additionally, producer input prices spiked at 1.6% m/m in August as oil prices firmed".

At 16:00 GMT the FxWirePro's Hourly Strength Index of British Pound was highly bullish at 158.196, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 54.3853. Those arguing to keep the benchmark at a record low point to the growing strain on consumers from the sterling-driven surge in prices.

The firm has been performing well in recent times, especially in the USA, and with President Trump's hoped for infrastructure boost and more general construction spending expected to remain strong, it should continue to benefit.

"Inflation rising back up to 2.9% in August very much keeps the squeeze on consumers as it highly likely marked another month of negative real income growth". This meant that real incomes fell by 0.5% in June.

  • Zachary Reyes