UK Inflation has come out hotter than expected, climbing to 3.8% against expectations of 3.7%. Services inflation climbed to 5% which will be of a concern to The Bank of England, with airfares representing a 30.2% month-on-month increase which was partly due to summer holiday travel.
Food prices also climbed to 4.9%, again higher than the projected 4.7% which will be of real concern, due to food pricing influencing household expenditure.
Of more concern is the fact that UK inflation is due to peak at 4% which is double the Bank of England's target and will now put real pressure on their next rate decision. In normal circumstances, higher inflation would allow for higher interest rates to eventually bring those prices down.
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