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CPI inflation rate reaches 4.5%

The rate of inflation rose to 4.5% in August from 4.4% in July as clothing prices climbed, the Consumer Prices Index (CPI) showed.

Clothing and footwear prices rose 3.7% overall between July and August – the biggest increase since records began in 1997, driven by women’s and men’s outerwear.

The figures, published by the Office for National Statistics (ONS), were in line with analyst expectations. The Bank of England expects the CPI to peak at 5% later this year before dropping back to the government’s target rate of 2% per cent over the following two years, once the impact of January’s rise in VAT will drop out of the annual comparison.

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