He said: “As has been the case since last summer, the main culprit was the rising cost of transport, driven by higher fuel prices.
“Oil is priced in dollars, and sterling has fallen around 13% on a trade-weighted basis since last June’s referendum. As such transport costs accounted for 0.8 percentage points of the overall figure.”
While BoE policymakers indicate inflation to peak at 2.8% in the first half of next year before falling back to target 2%, others believe it could move higher.
Brettell cites the thinktank NIESR, which forecasts peak inflation of 3.7%.
He added: “But despite elevated inflation, those hoping for higher interest rates are likely to be in for a long wait.
“The most recent Bank of England minutes note that to attempt to offset the effect of weaker sterling on inflation would come at a cost of higher unemployment.
“As such I expect the Bank to look through these higher numbers and keep bank rate at 0.25% for the remainder of this year.”
