Oil prices push UK inflation to record high
Oil prices push UK inflation to record high
AUG. 16 6:20 A.M. ET Soaring crude oil prices pushed inflation to record high levels in July, Britain's Office for National Statistics said Tuesday.
The Consumer Price Index rose to an annualized rate of 2.3 percent in July, from 2 percent the previous month, taking inflation to its highest level since records began in 1997.
Oil prices were the major driver behind the rise as they resulted in higher petrol prices and pushed up the cost of air and sea travel. Oil was trading at around US$65.68 a barrel in European electronic trading on the New York Mercantile Exchange Tuesday, after peaking at US$67.10 per barrel last week.
The resulting increase in inflation was stronger than economists had predicted, taking it past the government's target of 2 percent.
The Bank of England noted earlier this month when it cut its key interest rate that higher oil prices could raise inflation further in the short term, but added that the "slackening in the pressure of demand on supply capacity should lead to some moderation in inflation."
The central bank cut interest rates by a quarter of a percentage point to 4.5 percent on Aug. 4 amid sluggish household spending and investment growth.
The bank noted that output growth in Britain was subdued in the first half of the year, but saw conditions ahead improving -- a sign that the cut may be a one-time correction rather than the start of a series of reductions. Economists said that indications that inflationary pressures are building supported that view.
The data from the Office for National Statistics also showed that the headline Retail Price Index, which includes mortgage interest payments, was unchanged in July at an annual rate of 2.9 percent.
The underlying index, excluding mortgage payments, rose to an annual rate of 2.4 percent from 2.2 percent the previous month.
AUG. 16 6:20 A.M. ET Soaring crude oil prices pushed inflation to record high levels in July, Britain's Office for National Statistics said Tuesday.
The Consumer Price Index rose to an annualized rate of 2.3 percent in July, from 2 percent the previous month, taking inflation to its highest level since records began in 1997.
Oil prices were the major driver behind the rise as they resulted in higher petrol prices and pushed up the cost of air and sea travel. Oil was trading at around US$65.68 a barrel in European electronic trading on the New York Mercantile Exchange Tuesday, after peaking at US$67.10 per barrel last week.
The resulting increase in inflation was stronger than economists had predicted, taking it past the government's target of 2 percent.
The Bank of England noted earlier this month when it cut its key interest rate that higher oil prices could raise inflation further in the short term, but added that the "slackening in the pressure of demand on supply capacity should lead to some moderation in inflation."
The central bank cut interest rates by a quarter of a percentage point to 4.5 percent on Aug. 4 amid sluggish household spending and investment growth.
The bank noted that output growth in Britain was subdued in the first half of the year, but saw conditions ahead improving -- a sign that the cut may be a one-time correction rather than the start of a series of reductions. Economists said that indications that inflationary pressures are building supported that view.
The data from the Office for National Statistics also showed that the headline Retail Price Index, which includes mortgage interest payments, was unchanged in July at an annual rate of 2.9 percent.
The underlying index, excluding mortgage payments, rose to an annual rate of 2.4 percent from 2.2 percent the previous month.
posted by Marcel at 5:28 AM
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