UK inflation rate spikes up to 2.9%

LONDON (AP) — Inflation in Britain spiked up to 2.9 percent in the year to August, official figures showed Tuesday, in a development that has stoked speculation the Bank of England may raise interest rates sooner than expected regardless of how the country’s Brexit discussions shape up in coming months.

The Office for National Statistics said the increase from the previous month’s 2.6 percent rate was largely due to rising prices for clothing and motor fuels. The scale of the increase, which took the consumer price inflation rate to its joint-highest level in more than five years, was unexpected — the consensus in the markets was for a 2.8 percent rate.

After the publication of the figure, the pound jumped to its highest level in a year against the dollar, a signal that some traders, at least, think that borrowing rates could be heading higher later this year or early next. The pound was up 0.8 percent at $1.3268 in London trading.