The highest inflation rates have hit the UK since September 2013. According to today’s data from the Office for National Statistics (ONS) , month-on-month Consumer Price Index (CPI) was up by 0.5% and inflation is currently at 2.3%.
Increasing prices of food and fuel are the main reasons that February’s inflation rates jumped, point out economists. In the year between this and last February, food prices have jumped up by 0.3%, which is the first annual rise for the last two-two-and-half-years. Due to continuous bad weather in Southern Europe, particularly in Spain, vegetable prices have risen to record rates. For example, the price of iceberg lettuce, alone has jumped with 67% in February. A year ago, their price had dropped by 5.1%. According to ONS, vegetables were major factor determining the increase of the food prices in general.
Fuel is also more expensive compared to January 2017 – up 1.2%. According to Ben Brettell, senior economist at Hargreaves Lansdown, the fall of the pound since Brexit is behind the increasing transportation costs: “Oil is priced in dollars, and sterling has fallen around 13% on a trade-weighted basis since last June’s referendum. As such, transport costs accounted for 0.8 percentage points of the overall figure,” he explained.
There is also a rise in prices of other consumer goods like personal computers, laptops and tablets. This month-on-month increase is at 2.3%.
The data from ONS exceeds the target rate of 2% set by the Bank of England to determine when I will raise the interest rates. Some economists think the inflation will continue to grow and will surpass the 3% barrier by next year. According to Frances O’Grady, general secretary of the Trades Union Congress (TUC) , the major issue with these numbers is that inflation now is higher than the wages growth (2.2% for the last 3 months of 2016).” Working people across the UK are now facing the double blow of rising prices and slower wage growth. If the government doesn’t wake up, we risk sleepwalking into another living standards crisis.”
London’s getting cheaper
Despite the gloomy news from ONS there is a soothing light at the end of the tunnel, at least for the visitors of London. Since the pound has lost some of its value on the financial market, the UK capital now is more affordable to the visitors. According the Economist Intelligence Unit (EIU), London now is the cheapest major global metropolises with a cost of living falling behind New York.
In the ranking of the most expensive city in the world is currently Singapore, followed by Hong Kong and Zurich. London is at 11th position followed by Manchester at 12th.The cheapest metropolis in the world is Kazakhstan’s capital Almaty, where petrol costs 40p/l and a loaf of bread is around 70p.