Britain’s headline inflation rate stalled at 2.2 per cent in August, virtually ruling out a second consecutive interest rate cut by the Bank of England on Thursday, POLITICO reports.
Data from the Office for National Statistics (ONS) showed that the underlying trend – at least in the short term – had stopped improving due to soaring airfares and a steadily strengthening housing market. They ensured that services inflation, which has been worryingly persistent all year, accelerated to 5.9 per cent from 5.7 per cent in July.
Housing costs, which account for about a sixth of the broadest basket of goods and services tracked by the ONS, rose 0.6 per cent, leaving the so-called CPIH inflation rate stuck at 3.1 per cent.
However, producer prices, which usually indicate consumer price trends, continued to fall, helped by a steady decline in energy prices over the month. Raw material prices fell by 0.5 per cent over the month, while factory prices declined by 0.3 per cent, resulting in an annualised increase of just 0.2 per cent.
The pound rose slightly against the dollar and euro on the news as those expecting another bank rate cut on Thursday abandoned their bets. By 8:15 a.m. CET, the pound was worth $1.3174 and 1.1846 euros.
