Sterling leaps against the dollar after prices hike

The pound jumped a cent against the dollar today as prices rose at their fastest rate for almost two years in July.

The post-Brexit fall in sterling has already begun to work through to prices with imports like metals, parts and chemicals rising by 6.5% on an annual basis.

The wider measure of inflation, the consumer price index, picked up from 0.5% to 0.6% annually in July.

Mark Carney, governor of the Bank of England, earlier this month said that inflation was likely to rise above the Bank’s target of 2% by 2018, pushed up by the 13% fall in sterling since the referendum.

“There was no obvious impact on today’s consumer prices figures following the EU referendum results, though the Producer Prices Index suggests the fall in the exchange rate is beginning to push up import prices faced by manufacturers,” Mike Prestwood, head of prices at the Office for National Statistics said.

Economists had expected prices to remain flat in July and were surprised by the rise of 0.3% in the month.

“There is likely to be growing pressure on fiscal policy to help provide a boost in the Autumn Statement later this year,” said James Smith, economist at ING.