(Bloomberg) -- U.K. inflation surged more than expected to the strongest pace in more than nine years, adding to pressure on the Bank of England to rein in its stimulus for the economy.
Consumer prices jumped 3.2% in August, the most since March 2012, after dipping back to the central bank’s 2% target month before, the Office for National Statistics said on Wednesday. Economists had expected a reading of 2.9% and above the highest estimate.
The figures add to evidence that a post-lockdown boom is driving up the costs of raw materials and labor, threating to overheat an economy that the BOE is stoking with 150 billion pounds ($208 billion) of asset purchases this year. With house prices, wages and the cost of goods of all kinds surging, policy makers are under pressure to address shortages that have started to drag down the pace of the recovery.
The central bank has forecast that inflation will reach 4% by the end of this year, double its target, and then fall back in both 2022 and 2023. Investors are starting to anticipate that policy makers may have to boost interest rates as early as next year to keep the economy from overheating.
The strongest upward pressure came from prices charged by hotels and restaurants, which was heavily skewed by figures from last year when the government’s Eat-Out-to-Help-Out program led to large discounts across the sector.
The cost of used cars and fuels made a big contribution to higher transport costs. Housing and household services also rose sharply, reflecting higher rent costs.
©2021 Bloomberg L.P.
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