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Rising air fares fuel inflation

Soaring air fares have contributed to the UK rate of inflation remaining higher than City forecasts for August.


Inflation stayed at 3.1% as air fares increased by 16.1% from July to August, a record gain for this time of year, according to the Office for National Statistics.


Despite falling petrol prices and a drop in the cost of second-hand cars, big price rises in food and high street fashion stores, combined with the high air fares, kept the inflation rate unchanged.


Higher costs of bread, cereals and vegetables, and more expensive women’s clothing at the start of the autumn season, also stoked prices.


The Consumer Price Index held steady at the 3.1% – the sixth month in succession that it has been above the Bank of England’s 3% threshold.


Economists suggested the stronger CPI was putting pressure on the Bank of England to raise interest rates from the current low of 0.2%.


The Bank believes that inflation will drop back to its 2% target within two years.


 


 

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