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London Markets: U.K. inflation surges at fastest rate in at least 24 years

U.K. inflation rose at the fastest rate in at least 24 years in August, according to data released Wednesday.

The Office for National Statistics said consumer prices in the 12 months to August rose 3.2%, well above the 2% rise in July. The August gains were flattered in part by year-ago sales tax reductions and the government’s short-lived, “Eat Out To Help Out” program offering discounted meals at restaurants.

The August rise was the fastest since CPI data was first tabulated in 1997.

Economists at Bank of America upped their inflation forecasts after the data, expecting CPI to peak at 3.9% in November, 40 basis points higher than previously. “The upside for our forecasts came across a range of goods, especially second hand card prices, and package holidays,” said the BofA economists, who also said rising wholesale electricity prices was a factor behind their increased forecasts.

Those prices surged on Wednesday, with a U.K. natural-gas contract surging after a key cable from France was disconnected due to a fire.

Markets took the inflation data in stride, with a slight rise in bond yields
TMBMKGB-02Y,
0.261%
,
and the FTSE 100
UKX,
+0.08%

outperformed European rivals
SXXP,
-0.41%
.

The pound
GBPUSD,
+0.27%

also was steady.

Cybersecurity company Darktrace
DARK,
+12.37%

rallied 8% as it lifted its fiscal 2022 guidance.

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