Britain has the highest rate of inflation of all the world’s top economies as the Brexit-hit pound continues to squeeze household finances.
Figures from Paris-based think tank the Organisation for Economic Co-operation and Development (OECD) reveal the cost of living in the UK is rising faster than anywhere in the G7 group of leading global economies.
UK inflation hit 2.9% in August as rising clothing and fuel prices intensified the pressure on cash-strapped households grappling with low wage growth.
The rate of inflation is higher than that recorded by fellow G7 counterparts Canada, France, Germany, Italy, Japan and the United States – beating the average of 1.7%.
It is also above the average of 2.2% for the OECD area while likewise higher than the averages for the wider euro area, European Union and the G20 nations – at 1.5%, 1.7% and 2.3% respectively.
Among the 35 developed OECD economies, the UK’s inflation rate was only outpaced by Turkey at 10.7%, Mexico at 6.7%, Latvia at 3.1% and Estonia at 3.9%.
Israel was the only OECD area economy to see deflation – or falling prices – at 0.1%.
The Bank of England has a government-set target to maintain inflation at 2% but has been looking through the recent surge in prices and keeping interest rates low to counter Brexit uncertainty.
It has signalled in recent weeks that more stable economic conditions could see it raise interest rates as early as November as it looks to rein in inflation.
Britons have been suffering from paltry wage growth and rising costs as the weak pound since the Brexit vote has sent the cost of importing goods, energy and services soaring.
However, the OECD’s latest report showed annual inflation ticked up in all G7 economies in August while OECD area inflation rose to 2.2% from 2% in July.
It said this increase was mainly driven by energy price inflation, which accelerated to 5.9% across the OECD area, compared with 3.7% in July.
Food price inflation in the OECD area also edged up to 1.8% in August, compared with 1.7% in July.
Excluding food and energy, inflation was stable at 1.8% for the fourth month in a row.