Official figures show inflation in the U.K. rising to its highest level in nearly three years because of increases in the prices of food and motor fuel.
The Office for National Statistics said Wednesday that the annual rate of inflation rose to 2.5% in June from 2.1% the previous month. June’s rate is the highest August 2018 when inflation hit 2.7%.
The increase has moved inflation further above the Bank of England’s target of 2% and has stoked speculation that the U.K’s central bank will have to respond at some stage soon to keep a lid on price pressures in the economy.
Many countries around the world are experiencing a sharp increase in inflation as their economies recover from the shock of the onset of the coronavirus pandemic. On Tuesday, official figures showed the U.S.’s annual inflation rate running at a 13-year high of 5.4%.
Central banks around the world are hoping that the sharp spike in inflation is due to temporary factors related to pent-up demand and supply pressures, which will wind down over months to come.
“Policymakers are pricing in a recovery that is just right, with strong growth and temporarily higher inflation,” said Debapratim De, senior economist at Deloitte. “That seems likely. But it is by no means assured.”