MNI 5 THINGS: UK Aug CPI Gains Culturally Inspired

By Jai Lakhani, Jamie Satchi and Laurie Laird

     LONDON (MNI) - The following are the key points from the ONS' inflation

data published Wednesday by the Office for National Statistics.

     -- CPI rose in August to 2.7%, a six-month high, up from 2.5% in July and

above the Bank of England's 2.6% estimate. As MNI analysis highlighted, analysts

have a tendency to underestimate August inflation and this held true again.

     -- On the month, inflation rose by 0.7%, the joint-highest rise since April

2011. Excluding erratics, core inflation also notched a strong increase on the

month, up 0.8% m/m, taking the headline rate to 2.1%.

     -- Driving the August result was a 3.6% y/y rise in 'recreation and culture

prices', last seen higher in January 1992. Theatre tickets and PC games were

culpable for the bulk of the rise, according to the ONS. Households are spending

more on cultural goods -- the basket weight attached to this category is up

0.6pp to 15% in the last four years.

     -- After July's clothing and footwear promotions, retailers' new Autumn

range saw prices revert higher, providing upward inflationary pressure. This was

supplemented by higher sea and air fares, which rose by a greater margin this

year versus last year. Transport and clothing accounted for 0.1pp of the change

in the annual rate.

     -- Whilst London house prices declined by 0.7% on the year in July, the

worst since September 2009, the series has been revised considerably over the

past months. This took total house price growth to 3.1% -- the lowest in just

under five years.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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