UK INFLATION HOLDS STEADY AT 2.2% – Services prices keep Bank of England on alert
Inflation held steady in August but rose in the services sector which is closely watched by the Bank of England, data has shown, adding to bets in financial markets that the central bank will keep interest rates on hold.
Consumer price inflation (CPI) of 2.2% last month was unchanged from July, the Office for National Statistics reported. The Bank of England, which cut interest rates to 5% on August 1st, had expected inflation of 2.4% in August. It has forecast the CPI will rise to around 2.75% by the end of 2024.
Services inflation – an indicator of domestic price pressures – rose to 5.6% from 5.2% in July. The ONS said air fares, which jumped 22.2% between July and August, helped to push up services inflation. Fare prices usually rise between the two months but the ONS said the jump was the second largest since records began in 2001.
Prime Minister Keir Starmer’s Labour government, which is trying to speed up economic growth, said the data showed inflation was more manageable – it hit a four-decade high of over 11% nearly two years ago – but prices remained high.
Core inflation, which excludes more volatile energy, food and tobacco prices, sped up on a monthly and yearly basis.
