Cost of fuel drives UK inflation

16 July, 2013

Official figures show that inflation rose 0.2% last month to 2.9%, its highest since April 2012.

According to the Office for National Statistics, the largest upward contribution came from motor fuels, clothing and footwear.

Despite inflation running above its 2% target for the past four years, the Bank of England believes it will continue to rise to near 3% during 2013. Inflation is then expected to ease and return to target next year.

Chris Williamson, chief economist at Markit, said: "There are growing signs of the UK recovery gaining momentum, with the economy set for strong growth in the second quarter and companies reporting the brightest outlook for the year ahead since the financial crisis struck, but inflation clearly remains the UK's bug-bear and calls into question just how long this strong growth can persist for."

Markit's global survey of 11,000 companies in June this year showed that the number of UK firms expecting to raise their selling prices over the coming year picked up to the highest for two years, contrasting with an easing of inflationary pressures globally.





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