CPIH, which the ONS are now using as their headline measure and which includes owner occupiers’ housing costs, rose from 2.6% in July to 2.7%.
Rising prices for clothing and motor fuels were the main contributors to the increase in the rate between July and August 2017.
Air fares also rose between July and August but the rise was smaller than between the same two months a year ago and so resulted in a partially offsetting, downward contribution.
Thomas Wells, manager of the Smith & Williamson Global Inflation-Linked Bond Fund, said: “CPI remains well above the Bank of England’s 2% target and we expect it to remain above target throughout the third and fourth quarters of 2017. Headline inflationary pressure should begin to moderate in 2018 as the large moves in the pound drop out of the reported numbers.
“For consumers, this unfortunately does not mean that they can forget about inflation. History tells us that the impact of inflation on consumers tends to be lagged, i.e. companies will try to absorb some of the pain before passing on price hikes to consumers. Moreover, the broad CPI readings may bear no resemblance to the more severe level of real income erosion that is suffered by some individuals, particularly those living on fixed incomes. Wage growth in the UK remains poor despite the fact that the labour market ostensibly looks strong.
“Policy wise, we think the Bank of England will look through the inflation data and we still believe that the Bank will remain on hold until 2018.”
