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The rate has well exceeded the Bank of England’s target of 2%
Inflation increased to 3.2% in August, up from 2% in July, in what is the highest ever recorded increase according to the Office for National Statistics (ONS).
The consumer prices index (CPI) measure for last month was the highest it’s been since March 2012, although the ONS said much of the impact was likely only temporary.
The rate has again exceed the Bank of England’s target of 2%.
The ONS said the reason eating and drinking out was more expensive was because in August last year the Eat Out to Help Out Scheme was underway.
Additionally, businesses in the hospitality and tourism sectors benefitted from VAT discounts that were put in place to help some of the most severely impacted industries through the pandemic.
Jonathan Athow, deputy national statistician at the ONS, said: “August saw the largest rise in annual inflation month-on-month since the series was introduced almost a quarter of a century ago.
“However, much of this is likely to be temporary, as last year, restaurant and cafe prices fell substantially due to the Eat Out to Help Out scheme, while this year, prices rose.”
Martin Lawrence, director of investments at the Wesleyan Group, said: “Supply chain pressures have been one of the drivers behind this month’s spike in the rate of inflation to 3.2%, which is now well above the 0.7% rate recorded in January; however, the Bank of England still expects inflation to hit 4% by the end of the year.”
“Despite the headlines of wage growth, the climbing cost of living means that householders and savers are starting to feel the squeeze, which won’t be helped by the recently announced changes to National Insurance.”
“For those who have saved money during lockdown and are seeking to secure better returns on their savings, safeguarding their hard-earned cash is a must. With interest rates remaining at rock bottom, it’s essential that savers review all possible options to achieve real-term growth.”