Henry Nicholls | Reuters LONDON — Inflation in the United Kingdom slowed in August as fuel prices fell, although food prices continued to rise as the country’s cost-of-living crisis continues. The consumer price index rose 9.9 percent annually, according to estimates released on Wednesday by the Office for National Statistics, fractionally below the 10.2 percent consensus forecast among economists polled by Reuters. It was also down from July’s 10.1%. On a monthly basis, consumer prices rose 0.5%, fractionally below forecasts. Core inflation, which excludes volatile energy, food, alcohol and tobacco, rose 0.8% month-on-month and 6.3% year-on-year, in line with expectations. “The fall in the price of motor fuel made the largest downward contribution to the change in both the annual CPIH and CPI inflation rates between July and August 2022,” the ONS said in its report. “Increasing food prices had the largest, partially offsetting, upward contribution to the change in rates.” Sterling was almost flat against the dollar on Wednesday morning, trading around $1.1490. The UK has been hit by a historic cost of living crisis this year as food and energy prices soar and wage rises fail to keep pace with inflation, leading to one of the sharpest falls in real wages in history. Last week, Britain’s new prime minister Liz Truss announced an emergency budget package that caps annual household energy bills at £2,500 ($2,881.90) for the next two years, with an equivalent guarantee for businesses over the next six months and further support for vulnerable people. branches. Analysts expect the measures – estimated to cost the public purse around £130bn – to sharply reduce the outlook for inflation in the short term but raise it in the medium term.
“It could be bad luck”
The Bank of England is due to announce its latest monetary policy decision next Thursday after a delay due to the death of Queen Elizabeth II and is widely expected to opt for a sharp 75 basis point rate hike as it looks to curb inflation. . In its last meeting, the Bank predicted that inflation would peak at 13.3% before the end of the year and policymakers will reassess their outlook in light of the new Truss energy cap announcement. “Hopefully, the cap on energy bills may mean that inflation is now nearing its peak, although last month’s dip could likely be a fluke and we may see inflation rise even further in the coming months.” , said Richard Carter, head of fixed interest. research at Quilter Cheviot. “While the energy plan may help, it comes at the cost of higher levels of borrowing and government spending that could encourage the Bank of England to raise interest rates even more than originally expected.”
