Similar to the increase that occurred in July, the annual inflation rate in the United Kingdom increased by 2.2% in August. This was as a result of lower gas prices at the pump offsetting higher flying fares.
The preferred measure of the cost of living that the government uses has remained stable, according to figures from the Office for National Statistics (ONS). These figures are in line with the projections made by City economists and are also hovering just above the 2% objective that the Bank of England has set.
Since the beginning of 2023, when inflation was above 10%, consumers have witnessed a decrease in inflation, primarily as a result of decreased increases in the cost of energy and food.
The Bank of England anticipated that the consumer price index (CPI) would increase by approximately 2.4%, although the actual increase was lower than that.
There is a lot of pressure on the Bank to lower interest rates in order to stimulate the economy, but when policymakers meet on Thursday, they are expected to keep interest rates at their current level.
The price of petrol has decreased as a result of concerns that the economy of the entire world is slowing down and that demand from key customers like China will be lower in the coming months.
According to the Department of National Statistics (ONS), customers reduced their expenditure on expensive things such as furniture, and hotels also reduced their pricing, which helped to limit the growth in inflation. But an increase in air costs, particularly to destinations in Europe, pushed the Consumer Price Index (CPI) over the bank’s target. This was due to the fact that inflation in the services sector increased to 5.6% in August from 5.2% in July.
Despite the fact that inflation had slowed down over the course of the previous year, the ONS reported that the cost of petrol in August 2021 was 68% more than it was in March 2021, and the cost of electricity was 45% higher. This is an illustration of the pressure that has been placed on household budgets over the course of the past three years.
“Years of sky-high inflation have taken their toll, and prices are still much higher than they were four years ago,” said Darren Jones, the chief secretary to the Treasury. “The effects of inflation have been felt.” We are aware that millions of people across the United Kingdom are struggling, which is why we are determined to mend the foundations of our economy so that we can rebuild Britain and make every region of the nation better off. Therefore, while we wish for inflation to be more controlled, we are aware of the fact that millions of families are struggling.
The shadow chancellor, Jeremy Hunt, made the following statement: “Labour inherited inflation at the Bank of England’s target, and today’s figures show that they must do the hard work to keep inflation down, just as we did when we were in government.”
This includes the rejection of potentially harmful new employment rights, which would result in an increase in the cost of labour and, as a consequence, an increase in pricing.