Wednesday 15th September 2021 - 07:47 (BST)
Figures released by the Office for National Statistics (ONS) have shown the UK annual inflation rate jumped to 3.2% over August, significantly above forecasts of 2.9% and the highest level in over a decade.
The main upward pressure came from rising food and drink prices which were adversely affected by the governments “Eat Out to Help Out” scheme in August 2020. The 1.2% increase from June also represents the biggest monthly move since records began in January 1997.
The ONS said the rise was likely to be temporary as the reading had been heavily distorted by the discount scheme, however some analysts now believe inflation could continue to run higher before returning to pre-pandemic levels.
GBP softened despite showing signs of recovery following positive unemployment numbers yesterday and is now trading around €1.17 versus the euro and $1.38 versus the US dollar.
Data released by the ONS showed the UK now has over one million job vacancies, the highest level since records began in 2001, whilst the country's overall unemployment rate dropped to 4.6% during August.
The latest readings could also impact the Bank of England’s tapering strategy as it begins to look at dialling down its quantitative easing (QE) programme over the final quarter of the year.
