Business

Inflation surges on fuel costs and clothes prices after lockdown

The ONS said rising petrol prices were among the biggest contributors to an increase in inflation

UK inflation jumped to its highest level for four months in July after the largest hike in fuel prices for nearly a decade, official figures have shown.

The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation lifted to 1 per cent from 0.6 per cent in June.

A consensus of economists had predicted that inflation would stay flat at 0.6 per cent for the month.

The Retail Prices Index (RPI), another measure of inflation, also surged last month, to 1.6 per cent from 1.1 per cent in June.

RPI is used to calculate the cap on annual rail season ticket price increases in Britain.

The ONS said the leap in CPI came after petrol and diesel prices soared higher due to a rebound in global oil prices and as lockdown restrictions have begun easing worldwide.

A much smaller fall in the cost of women's clothing last month compared with a year ago also drove the hike in the cost of living.

Ian Stewart, chief economist at Deloitte, said: “We are in a disinflationary world of abundant spare capacity, rising unemployment and weak pay growth.

“Inflation will remain muted until the economy makes up the huge loss of activity sustained in the first half of this year.”

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: "Inflation has risen, in part, due to the largest monthly pump price increase in nearly a decade, as international oil prices rose from their lows earlier this year.

"The largest upward movement came from clothing where prices fell on the month but by less than a year ago, partly due to different sales patterns throughout the year so far.

"In addition, prices for private dental treatment, physiotherapy and haircuts have increased with the need for PPE contributing to costs for these businesses."

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