In June, UK inflation came in at 2.5% year-on-year, above the Bank of England’s target for the first time since August 2018.
The Office for National Statistics (ONS) reported Tuesday that higher prices for food, energy, used cars, and clothing contributed to the acceleration in consumer price index (CPI) from 2.1% in May.
It was a 2.5 percent rise over last year, exceeding the expectations of economists polled by Reuters.
In the foreign exchange market, the British pound rose against the euro and against the dollar to its highest levels since April 6.
For the first time in nearly two years, the CPI exceeded the BoE’s 2% target in May.
The Bank of England raised its inflation forecast last month, saying it now expects inflation to rise above 3% for a “temporary period”.
Andy Haldane, the former central bank chief economist who attended the central bank’s last policy committee meeting in June, warned against inflation at 4%, however.
“With a Monetary Policy Committee opposed to early action and the retirement of hawk Andy Haldane, it is unclear who would oppose early action,” said James Sproule, economist at Handelsbanken, who suggests the BoE reduce its government bond purchase program starting this fall.