Inflation accelerated at its fastest monthly pace on record in August, as it shot up to 3.2pc, a huge leap from July’s level of 2pc to take it far above the Bank of England’s target.
The jump of 1.2 percentage points is the largest ever recorded increase in CPI’s annual rate since records began in 1997.
The steep increase risks fuelling fears of rocketing prices as the UK recovery takes hold as transport costs and prices at restaurants rose dramatically. Transport costs jumped by 0.87 percentage points in August as people travelled again after repeated lockdowns, while hospitality prices pushed inflation up by 0.65 percentage points, its highest ever contribution.
But the Office for National Statistics said the spike will likely prove to be temporary, pointing to Rishi Sunak’s Eat Out to Help Out scheme last summer pushed the cost of dining out artificially low.
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What happened overnight
Asian shares fell on Wednesday as weak Chinese economic data reinforced worries about slowing growth globally as well as in the world’s second-biggest economy amid fraught nerves over a still-dominant pandemic and tapering of central banks’ stimulus.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.82pc, extending earlier losses after the release of the Chinese data, while Tokyo’s Nikkei shed 0.89pc, moving off a more than 31-year closing-high the day before.
A burst of data out of China showed businesses were grappling with the impact of localised lockdowns following sporadic Covid outbreaks, supply bottlenecks and high raw materials costs.
Retail sales grew at the slowest pace since August 2020 and missed analysts’ expectations, while industrial output also rose at a weaker pace from July, underscoring recent signs of slackening economic momentum in China and adding to expectations Beijing will offer more stimulus over coming months.
After the data, Chinese blue chips were down 0.73pc.
The Hong Kong benchmark shed 0.87pc dragged down by casino stocks as the gaming hub of Macau begins a consultation ahead of a closely watched rebidding of its multi-billion dollar casinos next year.
Shares of Wynn Macau at one point were down more than 30pc.
Coming up today
- Corporate: Redrow (full-year results); Fevertree Drinks, Restaurant Group, Trustpilot Group, Tullow Oil (interims)
- Economics: Consumer prices index (UK), retail prices index (UK); industrial production (US); retail sales (China), industrial production (China); labour cost (EU)