Inflation Edge Pressures Bank Outlook

What's happened

Inflation has moved higher in August, driven by petrol, diesel and airfares, according to ONS data. The figures have heightened expectations for the Bank of England’s next move as energy-price caps are updated and aviation costs rise.

What's behind the headline?

The Analysis

• Inflation momentum is broadening beyond energy, with transport and travel costs contributing to the rise.
• The Bank of England faces a hawkish task as the inflation trajectory remains firm near target limits.
• The path ahead depends on energy price movements and global supply pressures, including potential weather impacts.
• Readers should monitor how this affects mortgage rates and household budgets in coming months.

How we got here

The latest ONS CPI data show inflation rising to about 3.1% in August, up from 2.9% in July. Petrol and diesel costs have lifted transport prices, while airfares have climbed, contributing to the upwards shift. The Bank of England is preparing a decision on rates as energy bills set to rise with the October cap adjustment.

Our analysis

The Scotsman quotes ONS data and Bank of England expectations; Independent reports note the influence of Middle East tensions on oil and gas prices and mention Pantheon Macroeconomics as a forecast source. Direct quotes from Alice Haine and Ranald Mitchell are included in the article text.

Go deeper

• What will the Bank of England do next based on the latest inflation data?
• How should households adjust budgets in light of rising fuel and energy costs?
• What other factors could push inflation higher before year-end?

More on these topics

• Office for National Statistics

  The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.

• Bank of England - Bank in London, England

  The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.

• Department for Energy Security and Net Zero - Government department

  The Department for Energy Security and Net Zero is a ministerial department of the Government of the United Kingdom. It was established on 7 February 2023 by a cabinet reshuffle under the Rishi Sunak premiership.

• United Kingdom - Country in Europe

  The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the north­western coast of the European mainland.