Tuesday, 12 September 2017

Pound hits year high on inflation data stronger than expected in August

The pound hit its highest level against the dollar this year after UK inflation was stronger than expected in August.

The latest official figures showed the CPI inflation rate rose to 2.9% in August as fuel and clothing prices increased. That was up from July's rate of 2.6% and above forecasts of 2.8%.

Sterling jumped against the dollar on the news, hitting $1.3273 at one point, its highest since the start of 2017.

The pound was also higher against the euro, up 1% at 1.1122 euros.

The latest inflation figure could put further pressure on the Bank of England to consider a rise in interest rates, as it has an inflation target of 2%.
The Bank will announce its latest decision on rates on Thursday. However, analysts are not expecting it to take any action yet.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said he thought the prospects of a rate rise this year were "remote".

"Domestically-generated inflation is subdued, inflation expectations have remained well-anchored and GDP growth is too weak to warrant higher rates," he said.

The jump in the pound send shares lower, with the FTSE 100 share index down 20.33 points at 7,393.26.

BBC    News.