INFLATION could begin to rise again next year despite a dip in the cost of living last month, economists warned yesterday.
Smaller rises for utility bills and clothing prices compared with last year helped the consumer price index rate of inflation edge down to 2.5 per cent in August from 2.6 per cent in July, the Office for National Statistics said.
But the rising cost of fuel at the pumps maintained upward pressure on inflation and will add to fears that the rate will not fall as rapidly as the Bank of England hopes, tightening the squeeze on households.
Economists also warned droughts in the US are likely to mean higher food prices while more energy price increases are in the pipeline this autumn.
Higher university tuition fees will also add to inflation next month.
Victoria Clarke, economist at Investec, said inflation could go back up towards three per cent by the middle of next year.
She said: ‘‘From here we do expect inflation to moderate a touch further. However, we should caution that we do expect this trend to turn upwards again soon.
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