The inflation rate in the UK unexpectedly increased in August, reaching 2.7 per cent, the highest rate seen in six-months, after economists had expected a consumer prices index (CPI) rate of 2.4 per cent, the Office for National Statistics (ONS) revealed.
Following the release of the figure from the ONS, the pound grew stronger against the dollar to £1 for $1.32, its highest level since July.
However, the ONS revealed that wages are still rising more than inflation, with last week’s data illustrating that wages, excluding bonuses, grew by 2.9 per cent in the three months to July. The office credited the drive in inflation to an increase in price for recreational goods, transport and clothing.
The CPI was 2.5 per cent in July, which marked the first jump in the index since November.
Commenting, ONS head of inflation Mike Hardie said: “Consumers paid more for theatre shows, sea fares and new season autumn clothing last month.
"However, mobile phone charges, and furniture and household goods had a downward effect on inflation."
The year-on-year rise of CPI during August resulted in the gap between inflation and wage increases narrowing, while economists are waiting for the August earnings figures.
Also commenting, Centre for Economics and Business Research senior economist Alastair Neame stated: “Today's inflation data show the rate of price growth accelerated in August, and may well prove to have exceeded total earnings growth in the same period. Unless UK workers can increase their productivity, this trend is likely to continue - squeezing living standards over the medium term.”