Inflation Highest in 4 Years

Inflation At 4 Year High.

The Office for National Statistics has release inflation figures for May 2017, hitting highs that have not been seen for 4 years.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH, not a National Statistic) 12-month inflation rate was 2.7% in May 2017, up from 2.6% in April.

The rate has been steadily increasing following a period of relatively low inflation in 2015 and is at its highest since April 2012.

Rising prices for recreational and cultural goods and services (particularly games, toys and hobbies) was the main contributor to the increase in the rate.

There were smaller upward contributions from increased electricity and food prices.

These upward contributions were partially offset by falls in motor fuel prices, and air and sea fares, the latter two influenced by the timing of Easter in April this year.

The Consumer Prices Index (CPI) 12-month rate was 2.9% in May 2017, up from 2.7% in April.  Highest since June 2013 – 4 year high

The Retail Prices Index (RPI) measure of inflation increased to 3.7% in June, up from 3.5% the month before.  Its highest level since February 2012 – 5 year high.

Comment

This will put increasing pressure on the Bank of England to increase interest rates later this week.

In addition, it puts increasing pressure on people's budgets as costs rise as well as our savings being devalued if you are earning only say 1% pa in interest yet the value of your savings is being devalued by inflation at 2.7%pa.