Finance: Inflation jumps to its highest level since Brexit in August

The UK's latest inflation numbers were published on Tuesday morning.

LONDON — Inflation in August jumped to its joint-highest level since the vote to leave the European Union last year, as Brexit continues to push up the cost of living in the UK.

The Office for National Statistics said in its latest release that the UK's Consumer Prices Index (CPI) inflation rate — the key measure of inflation — was 2.9% in August, up from 2.6% in the previous month.

Inflation had been expected to climb to 2.8% from the 2.6% level seen in both June and July, according to economists polled before the release, but just exceeded those expectations.

CPI measures the weighted average of prices of a basket of goods and services, such as food, transportation, and medical care.

CPIH, a measure which includes costs associated with maintaining a home — and which the ONS cites as a more useful indicator of living costs than CPI — was at 2.7%, also up from 2.6% at the last reading.

"Rising prices for clothing and motor fuels were the main contributors to the increase in the rate between July and August 2017," the ONS said in a statement.

"Clothing prices rising faster than last year, along with a hike in the cost of petrol, helped nudge inflation upwards. Conversely, these effects were partially offset by airfares, which rose more slowly than during last year’s summer holidays," Mike Prestwood, the ONS' head of inflation said.

"The costs of raw materials and goods leaving factories also increased slightly, mainly due to oil and fuel prices," he added.

The chart below illustrates the sharp rise in inflation following last year's Brexit vote. OOH represents owner occupiers' housing costs, which measures the cost of owning, maintaining, and living in one's own home:

The sharp fall in the value of the pound following the UK's vote to leave the EU last year has raised the cost of imports and pushed up the rate of inflation. Inflation is expected to peak at more than 3% at some point in 2017, according to the latest Bank of England forecasts.

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