UNITED KINGDOM INFLATION

LONDON : British inflation accelerated last month on high transport costs, hitting average workers'  purchasing powers - but -

Boardroom pay has surged, data showed on Wednesday.

The Consumer Price Index's [CPI] 12-month rate picked up speed to 2.5 per cent in July after 2.4pc in June, the office for National Statistics [ONS] said in a statement.

The news came two weeks after the Bank of England [BoE] hiked interest rates by a quarter-point to 0.75 pc to tame high inflation.

The CPI reading, which met expectations, was the first increase since November 2017.

Separate ONS data had showed on Tuesday that average earnings increased by 2.4pc in the year to June. But that was a nine-month low and followed 2.5pc for the previous month.

''Prices were driven higher last month due in part to a rise in transport costs, in turn partly due to a rise in the cost of motor fuels,'' said Laura Suter, analyst at Stockbroker AJ Bell.

She added : ''The UK workforce is now failing to make more than the rise in prices each month.

This is squeezing households and will in turn have a knock-on effect on consumer spending and the UK's economic growth.''

The CPI has now held above the BoE's official 2pc target since February 2017.

Since Britain's shock EU exit referendum  in June 2016, Brexit uncertainty has weighed on the British pound and pushed up the cost of imported goods thus feeding higher inflation.

''The CPI inflation rate has now been above the BoE's target rate of 2 pc for 18 consecutive months,'' said economist Alistair Neame at the Centre for  Business and Economics Research. [CEBR] AFP.