Consumer prices rose 0.7 percent on the month in August. Although a seasonally strong period for prices, this latest jump was notably sharper than expected, the steepest since April 2011, and firm enough to lift the annual inflation rate by 0.2 percentage points to 2.7 percent. This was its second successive acceleration and equalled the highest post since January.
The main contribution to the monthly change in yearly inflation came from recreation and culture where a 0.6 percent monthly rise was well above the 0.1 percent increase seen in 2017. This alone added 0.06 percentage points. Elsewhere, transport added 0.05 percentage points and clothing and footwear 0.04 percentage points. Partial offsets were provided by communication (minus 0.03 percentage points) and furniture and household goods (also minus 0.03 percentage points).
As a result, the core CPI was up fully 0.8 percent on the month which raised its annual rate from 1.9 percent to 2.1 percent, a 3-month peak. The CPIH, the measure preferred by the ONS, was up 0.6 percent versus July and 2.4 percent on the year, a tick above last time's mark.
Today's report plays into the hands of the BoE MPC's hawks but, with Bank Rate having been raised just last month, is unlikely to have any immediate impact on monetary policy. Still, should wages start to accelerate more significantly, there could be a very difficult balancing act for the BoE to achieve if Brexit turns sour.