Business World

Tuesday 23 May 2017

Soaring UK inflation likely to spark hefty hikes here

ECONOMY

Thomas Molloy

Thomas Molloy

BRITISH inflation continued to soar last month following the biggest rise in utility bills in two years and record hikes in clothing and furniture prices.

The Office for National Statistics said consumer prices in our largest trading partner rose 0.6pc last month, taking the annual inflation rate up to 4.5pc from 4.4pc in July, in line with analysts' expectations.

Economists said the increase was unlikely to deter British policymakers from injecting more stimulus to shore up the ailing economy.

Rampant inflation is the UK is likely to push up prices here because so many retailers still source their goods in the UK for historic reasons.

Britain is one of the few countries that exports more goods to Ireland than it imports.

Separate trade figures released by the statistics office yesterday showed that British exports to Ireland rose £242m to £4.6bn in the first seven months of the year. Imports of Irish goods to the UK jumped £105m to £3.1bn.

UK inflation has been above the Bank of England's (BoE) 2pc target for almost two years, but price pressures have mainly been driven by oil and commodity prices and a hike in sales tax last year -- effects which the central bank expects will wane.

In its latest quarterly projections, BoE forecast inflation would rise to 5pc later this year, but subside quickly over the next two years, as one-off effects fall out of the data and economic growth remains weak.

Irish Independent

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