British annual inflation surged to a near two-year high of 1.0 per cent in September, official data showed Tuesday, as a tumbling pound raised prices of imported goods and attracted tourists.
The Office for National Statistics said the jump in the rate, from 0.6 per cent in August, was mainly the result of significant increases to prices of women’s outerwear, although not necessarily a direct result of the pound’s slide in the wake of Britain voting in June to exit the European Union.
Analysts, whose consensus forecast had been for a jump in the annual inflation rate to 0.9 per cent, noted however that gains to other items, such as hotel rooms and oil, had been triggered by the pound’s slump.
‘The UK September inflation figures were slightly stronger than expected, with the annual headline rate rising to its highest level since November 2014,’ noted City Index analyst Kathleen Brooks.
‘The main contributors to rising prices in the UK were clothing, overnight hotel stays and motor fuels. All of this can be traced back to the fall in the pound: oil imports are getting more expensive, clothing imports are also costing more, and the weak pound is boosting the tourism industry, which appears to already be fuelling a rise in hotel prices,’ she added.
Separately Tuesday, luxury fashion company Burberry said its UK sales had rocketed by more than 30 per cent in the three months since the Brexit vote, as tourists took advantage of the weak pound, which has hit 31-year lows against the dollar and 7.5-year troughs versus the euro since late June.
Offering caution on the pound’s role on pushing up prices, the ONS said in a statement that ‘whilst the depreciation in sterling is likely to increase the cost of importing goods and outsourcing production, there are reports of businesses having measures in place to protect against exchange rate changes in the short-term’.
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