The UK’s inflation rate rose to 1% in September, its highest level in 22 months, indicating that the sterling’s declining value has begun to hit import prices. The slump in the value of the pound following the referendum result reflects investors’ fears of the economic state of the UK following the Brexit vote, with the BBC reporting today that the pound is now the world’s worst performing currency of 2016 [http://www.bbc.co.uk/news/business-37676869].
Despite the Office for National Statistics stating that there was “no explicit evidence the lower pound is pushing up prices of everyday consumer goods”, analysts are pointing to higher prices on imported goods, such as clothing and petrol, as indicative of the impact of Brexit on the UK’s inflation. The price of clothing rose 6% in September, whilst last week saw the price of unleaded petrol rise to its highest level in more than a year. Economists are warning shoppers that prices of consumer goods will continue to rise in the upcoming months, and are predicting that inflation could rise to between 3% and 4% in 2018.