Inflation rates rise, further increases due this year

THE RATE of inflation has risen again and is expected to rise further before the end of the year before starting to fall, although it will remain well above the Bank of England's target rate of two per cent for at least two years.

The Consumer Prices Index saw the rate rise from 4.4 per cent to 4.5 per cent in July, while the Retail Prices Index increased from five per cent to 5.2 per cent.

The Bank has blamed the new figures from the Office of National Statistics (ONS) on the VAT hike from 17.5 per cent to 20 per cent earlier this year. It also pointed to rising global energy prices, the effects of which will continue to be felt over the next few months in the UK.

The ONS said that clothing and footwear pushed up inflation the most, with a 3.7 per cent monthly jump seen between July and August, while the price of recreation products, such as computer games, fell.

The Bank of England has so far refrained from raising the interest rates from their historic low of 0.5 per cent out of concerns over harming the fragile economy.

Read a full report at BBC News. ·