Weak pound drives inflation surge

BRITISH annual inflation surged to a near two-year high of 1 percent in September as a tumbling pound raised prices of imported goods and attracted tourists.

The Office for National Statistics (ONS) said the jump in the rate, from 0.6pc in August, was mainly the result of significant increases to prices of women’s clothing, although not necessarily a direct result of the pound’s slide in the wake of Britain voting in June to exit the EU.

Analysts, whose consensus forecast had been for a jump in the annual inflation rate to 0.9pc, noted however that gains to other items, such as hotel rooms and oil, had been triggered by the pound’s slump.

“The UK September inflation figures were slightly stronger than expected, with the annual headline rate rising to its highest level since November 2014,” said City Index analyst Kathleen Brooks.

Separately, luxury fashion company Burberry said its UK sales had rocketed by more than 30pc in the three months since the Brexit vote, as tourists took advantage of the weak pound, which has hit 31-year lows against the dollar and 7.5-year lows versus the euro.

Offering caution on the pound’s role on pushing up prices, the ONS said that “whilst the depreciation in sterling is likely to increase the cost of importing goods and outsourcing production, there are reports of businesses having measures in place to protect against exchange rate changes in the short-term”. –