Inflation rises to fifty-month high

Inflation rises to fifty-month high

Inflation rises to fifty-month high

According to the data furnished by the Ministry of Statistics & Programme Implementation, August's consumer price index (CPI) inflation shot-up a full one percentage point to 3.36 per cent from a rise of 2.36 per cent in July.

The rise in August CPI gave further evidence of the continue effect of last year's sterling depreciation, with most of the rise because of those components of the CPI that are particularly sensitive to movements in the exchange rate, stated Lloyds Bank in a research report.

On a sequential basis, the country's Consumer Food Price Index (CFPI) rose to 1.52 per cent during the month under review when compared to July 2017.

The main upward pressure came from clothing and footwear prices, which climbed to its highest level since official records began at 4.6% year-on-year in August. "Retail inflation is likely to be pressured in the coming months", said Kavita Chacko, senior economist at Care Ratings, told IBTimes India. It was the first increase in six months.

Fuel prices sank by 1.3% for the period after growing by 0.7% between June and July in 2016.

Inflation looks set to have rebounded last month as rising food and fuel prices cause the cost of living to march higher.

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The monetary policy committee (MPC) of the central bank had warned prices could start accelerating soon, reflecting caution, despite pressure to cut more aggressively after consumer inflation remained below its central target since October.

There has been a bigger-than-expected jump in the rate of inflation, to 2.9% last month, aided by a Brexit-related leap in clothing costs.

The most recent wages data showed average weekly earnings rising at an annual pace of 2.1%.

Furthermore, producer output prices - also known as factory gate inflation - rose to the highest level since May, putting pressure on manufacturers to raise their prices.

Mike Prestwood, ONS head of inflation, said: "Clothing prices rising faster than past year, along with a hike in the cost of petrol, helped nudge inflation upwards". Economists had expected the figure to rise to 2.8 per cent. The price of petrol rose by 1.8p a litre to 115.7p in August, while diesel picked up by 2p to 117.6p.

Manufacturing production also grew slightly by 0.1 percent after a 0.5 percent contraction in June due to the economic reforms.

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