Inflation remained steady in August, with persistent price pressures still evident, as the Bank of England contemplates its next steps regarding interest rates.
The Office for National Statistics (ONS) has released new data showing that inflation was at 2.2 per cent in August, unchanged from July and matching economists' predictions, as reported by .
However, core inflation, which excludes more volatile elements such as food and energy, rose to 3.6 per cent. This figure aligns with consensus but is an increase from July's 3.3 per cent.
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Grant Fitzner, ONS Chief Economist, stated that inflation remained stable in August due to "various price fluctuations offset each other".
He further explained that significant changes came from air fares, particularly to European destinations, which saw a substantial monthly increase, counterbalanced by lower fuel prices and decreasing costs in restaurants and hotels.
The data revealed that transport prices increased by 1.3 per cent month-on-month, while prices in restaurants and hotels fell by 0.7 per cent, largely due to alcohol prices rising at a slower pace than the previous year.
Services inflation, considered a reliable measure of inflationary trends in the domestic economy, rose to 5.6 per cent, up from 5.2 per cent the previous month.
Despite most economists predicting the rise in services inflation, it marked the first increase since January, indicating some stubborn price pressures.
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Ruth Gregory, Deputy Chief 海角视频 Economist at Capital Economics, remarked, "The rise in services inflation...suggests the Bank of England will almost certainly press the pause button on interest rate cuts on Thursday."
Suren Thiru, Economics Director at ICAEW, observed that inflation is encountering "a difficult phase" and with services sector prices growing, the overall inflation rate is expected to remain above target for a considerable period.
On the backdrop of the latest data, anticipation builds ahead of the Bank of England's impending interest rate announcement, with market predictions leaning towards maintaining the benchmark Bank Rate at 5.0 per cent.
After cutting rates last month for the first time since the outbreak of the pandemic, policymakers face the prospect of taking a watchful approach amidst sustained indicators of persevering inflation.
Contrasting against the economic pressures, regular pay growth continues to stand strong at over five per cent, while unemployment has dipped to 4.2 per cent, indicating a tightly wound labour market.
Projections from the Bank have set the inflation rate to ascend to just short of three per cent towards the end of this year as the dampening influence of lower energy costs begins to dissipate.
Lastly, during an appearance at the Jackson Hole central bankers' summit, Governor Andrew Bailey expressed prudence regarding inflation forecasts, stating, "The second round inflation effects appear to be smaller than we expected," before adding, "But it is too early to declare victory."
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Although the likelihood of a rate cut has increased in recent days, market expectations still lean towards the Bank holding rates tomorrow, markets anticipate at least one more rate cut this year, possibly in November.
Darren Jones, chief secretary to the Treasury, described lower inflation levels as "welcome", but noted that "prices are still much higher than four years ago".