The rate of inflation, as measured by the Consumer Prices Index, rose to 2.9% in August 2017 – up from 2.6% in July 2017.
Rising clothing and petrol prices were the main factors behind the increase, resulting in its joint highest rate in more than 5 years.
Following its decision to hold interest rates at 0.25% this month, the Monetary Policy Committee (MPC) said “some withdrawal of monetary stimulus was likely over the coming months” in an attempt to return the rate of inflation to its 2% target.
But the MPC indicated that any potential rate rise will be “gradual” and “limited” in the coming months.
Mark Carney, governor of the Bank of England, said:
“I would caution that the persistence of major secular factors pushing down on the long-run global equilibrium real rates still means that policy rates can be expected only to rise a limited extent at what can be expected to be a gradual pace, settling at levels significantly below those seen pre-crisis.”
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