No change in CPI inflation ahead of interest rate decision – but another measure ticks unexpectedly up
While the headline figure staying steady is welcome, there are unwelcome rises in other measures of inflation that are being watched by officials at the Bank of England as they plot their next interest rate move.
There’s been no change in the rate of price rises, official inflation figures showed.
The rate of inflation stood at 2.2% in August, the Office for National Statistics said, the same as a month earlier.
The announcement comes the day before interest rate setters at the Bank of England decide on the cost of borrowing, controlled through the interest rate.
Markets are expecting only a 26% chance of an interest rate cut.
Rises behind the headline figure
But another measure of inflation ticked unexpectedly up. Core inflation rose to 3.6%, even higher than economists had forecast.
Bank officials closely watch core inflation as it gives a reading on price rises without elements like food and energy, which are prone to rise and fall quickly.
A rise in core inflation to 3.5% had been anticipated.
An increase was also seen in services inflation, which rose from 5.2% in July to 5.6% in August. This measure encompasses the culture and hospitality sectors.
Why?
The main item acting to bring up inflation was airfares to European destinations, which showed a large rise during the months, following a fall a year ago, the ONS said.
Be the first to get Breaking News
Install the Sky News app for free
Read more from Sky News:
Bid to end ‘exploitative’ zero-hours contracts
Energy firm to pay compensation to customers
Lower restaurant and hotel costs, and a cheaper price for refilling a tank of petrol or diesel, was a balance against the air far rise, as was slightly cheaper shop-bought alcohol.
Cheaper oil prices also meant the cost of raw materials was down, which meant the cost of goods leaving factories slowed.
Keep up with all the latest news from the UK and around the world by following Sky News
Responding to the figures chief secretary to the Treasury, Darren Jones, said: “Years of sky-high inflation have taken their toll, and prices are still much higher than four years ago.
“So, while more manageable inflation is welcome, we know that millions of families across Britain are struggling, which is why we are determined to fix the foundations of our economy so we can rebuild Britain and make every part of the country better off.”
