UK inflation continues to pick up steam with latest figures from the Office for National Statistics suggesting CPI is running at an annualised rate of 1.6%, and RPI running at 3%.
That consumer price index figure is nearing the government-imposed target of 2%, which the Bank of England’s Monetary Policy Committee (MPC) is supposed to follow when setting interest rates. The retail price index rate of 3% is one of the highest in the past few years. The RPIX – RPI excluding mortgage interest payments – remained steady in June at 2.3%, still close to the 2.5% RPIX rate the Bank was supposed to use as its target under previous rules governing interest rate decisions by the MPC. Allowing CPI to rise above 2% is not necessarily a problem as the MPC has leeway of 1%...
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