What's happened
UK inflation remained unchanged at 2.2% in August, as rising airfares offset lower petrol prices. This stability raises expectations that the Bank of England will pause interest rate cuts in its upcoming decision. Services inflation increased to 5.6%, prompting concerns among policymakers about persistent price pressures.
Why it matters
What the papers say
The Scotsman reported that inflation held steady at 2.2%, with rising airfares contributing to increased services inflation. The Independent highlighted that inflation has remained above the Bank of England's target for two months, reinforcing expectations of a pause in rate cuts. Economists from various sources, including Investec, predict that while inflation may fluctuate, significant cuts in interest rates are unlikely in the immediate future. The BBC noted that inflation pressures are easing but remain a concern for consumers, particularly regarding housing costs.
How we got here
Inflation in the UK has fluctuated throughout the year, peaking at 11.1% in October 2022. Recent data shows inflation has remained above the Bank of England's 2% target for two consecutive months, with significant contributions from the services sector.
Common question
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