Inflation remained above the Bank of England’s 2% target last month, official figures show, as rate setters prepare to announce the next decision on interest rates.
The Consumer Prices Index, which tracks cost changes across the economy, rose by 2.2% in the year to August, data just released by the Office for National Statistics.
Services inflation rose by 5.6% in August, as economists expected, compared to 5.2% in July amid a possible impact from Taylor Swift’s UK tour.
Inflation has now been slightly above the BoE’s 2% target for two consecutive months. The announcement comes a day before the Bank of England‘s Monetary Policy Committee (MPC) makes its interest rate decision.
Read more: Bank of England expected to hold interest rates as investors await November cut
Markets are expecting Threadneedle Street to hold rates, with only a 37% chance of a cut.
Grant Fitzner, chief economist at the ONS, said: “Inflation held steady in August as various price fluctuations offset each other.
“The main movements came from air fares, in particular to European destinations, which showed a large monthly rise, following a fall this time last year.
“This was offset by lower prices at the pump as well as falling costs at restaurants and hotels.
“Also, the prices of shop-bought alcohol fell slightly this month, but rose at the same time last year.
“Following two months of growth, raw material prices fell, driven by lower crude oil prices, while the increase in the cost of goods leaving factories slowed again.”
Darren Jones, Chief Secretary to the Treasury, 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.”
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