Inflation reached 3.8 per cent in the year to August, according to official data, issuing a stark warning to Bank of England officials before Thursday's critical interest rate decision.
The July inflation reading stood at 3.8 per cent, with August's figure expected to reinforce that Bank of England policymakers will opt to maintain interest rates at their upcoming Thursday meeting, as reported by .
Economists are anticipated to scrutinise closely the effects of elevated food price inflation and services inflation, given their respective influence on British consumers' perceptions of living costs and wage pressures.
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The Office for National Statistics (ONS) reported that services inflation stood at 4.7 per cent, marginally down from the five per cent recorded the previous month.
Core food price inflation reached 5.1 per cent across the 12-month period, surpassing the previous month's level.
This marked the fifth consecutive monthly increase for the measure.
Kris Hamer, director of insight for industry group the British Retail Consortium, commented: "Food inflation climbed above 5pc in August for the first time in 18 months as rising employment costs and poor harvests drove up retailers' costs.
"With food inflation now outpacing wages, many families will be struggling with the rising cost of living."
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Price growth may deteriorate further, with the Bank's projections from last month suggesting it could reach double its two per cent target rate come September. The monetary policy report indicated that inflation would only drop back to two per cent in 2027, with Zara Nokes, an analyst at JP Morgan Asset Management, describing the 海角视频's price growth as "increasingly ugly."
Nokes emphasised it was "imperative" for the Bank of England to intensify efforts to "stamp out inflation."
Stubborn inflation poses a challenge to policymakers
Chancellor Rachel Reeves is reportedly contemplating plans to alleviate the cost of living for households by lowering energy bills, which she believes could be accomplished by exempting them from VAT.
In response to the new release, she expressed her determination to reduce costs and assist those grappling with higher bills. "I know families are finding it tough and that for many the economy feels stuck," stated Reeves.
Shadow Chancellor Mel Stride attributed high inflation to Labour's £20bn employment tax raid and decision to increase government borrowing. "With borrowing costs hitting a 27-year high, working people and businesses are bracing for even more tax rises to pay for Labour's mismanagement."
"While Labour are distracted – lurching from one scandal to the next – families are paying the price for Rachel Reeves' economic mismanagement."
"Through our plan for change we are taking action - raising the National Living Wage, extending the £3 bus fare cap, and expanding free school meals, to put more money in people's pockets while we work to build a stronger, more stable economy that rewards hard work."
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However, the looming threats of persistent inflation and the postponement of the Budget are expected to influence policymakers' thinking ahead of tomorrow's interest rates decision.
City AM's Shadow Monetary Policy Committee opted 8-1 to maintain interest rates, with the majority of economists arguing that a "pause" would be more appropriate given elevated inflation levels.
Vicky Pryce, chief economics adviser to the British Chambers of Commerce, stood as the sole member on the mock panel to support a 25 basis point reduction owing to stagnation within the 海角视频 economy.
Additional members also highlighted the easing conditions in Britain's labour market as likely to suppress price growth over the coming year.
Analysts broadly anticipate that interest rates will remain unchanged, though many are monitoring potential shifts in rhetoric that could signal monetary policy becoming more restrictive.
The voting patterns of two of the MPC's most dovish members, external appointees Alan Taylor and Swati Dhingra, will prove pivotal in demonstrating whether rate-setters continue advocating for accelerated rate reductions.