UK inflation saw another unexpected rise last month, stirring fresh economic concerns.
As per multiple reports, UK inflation increased last month to 3.8% driven by higher food and travel costs.
This has raised fresh concerns that the Bank of England might postpone making more interest rate cuts.
The consumer prices index showed annual inflation rose from 3.6% in June to 3.8% in July, staying above the Bank of England’s 2% target for the 10th month in a row.
Because of this, another interest rate cut is unlikely this year and markets now expect the next possible cut to happen around next spring.
The figures also indicate that rail fares could increase by 5.8% next year, since regulated ticket prices are typically based on July’s retail prices index (RPI) which was 4.8%, plus an extra percentage point.
Reports suggested that the rise in prices was mainly caused by more expensive flights tickets which went up 30% in a month because of the summer holiday season.
On the other hand, petrol prices pushed inflation up a little compared to the last year while food and non-alcoholic drinks became 4.9% more expensive in July than the year before with beef, orange juice, coffee and chocolate among the items that see the biggest price rices.
Droughts in southern Europe have raised food prices in the UK which usually drops in summer.
This put pressure on the government during pay talks with public sector unions since minister want pay rises under 4% but workers may demand more because of the higher living costs.
