CPI Inflation Up RPI Up

CPI Up and RPI Up.

The Office for National Statistics has today released inflation figures for August2017, with the headline CPI inflation and RPI inflation both up.

Inflation + Housing Costs CPIH

The Consumer Prices Index including owner occupiers’ housing costs 12-month inflation rate was up to 2.7% pa compared to 2.6% pain July 2017.  This is known as CPIH and a benchmark we believe that is now included owner occupier housing costs as mortgage interest rates are low.  This is not CPI but CPIH.

Consumer Prices Inflation CPI

The Consumer Prices Index (CPI) was 2.6% pa in July 2017 with a huge jump in August 2017 to 2.9% pa.

Retails Prices Index (RPI) – the old measure of inflation

No mention of the RPI increases in the headlines today yet again today but RPI actually increased yet again from 3.6% pa July 2017 to 3.9% pa in August 2017. Another massive 0.3% pa increase.

Comment

These are big jumps of 0.3% pa inflation.  This will put ever increasing pressure on the Bank of England to increase interest rates.  The Bank of England suggested they would not budge until CPI hit 3.0%, well we think we are all but there.  Expect the £ to strenghten against the $, expect FTSE 100 to fall or at least have a mini wobble today.  Long term, the heat is now on the Bank of England.