Inflation, which includes owner-occupant housing costs, moderated to 6.3% in August, down from 6.4% in July.
The UK inflation unexpectedly fell from 6.8% to 6.7% annually in August, when the market consensus expected a rise of 7%. August’s rate was the lowest since February 2022, the Office for National Statistics (ONS) reported. Core inflation fell from 6.9% to 6.2%, compared to the estimate of 6.8%.
The inflation which includes owner-occupant housing costs, moderated to 6.3% in August, down from 6.4% recorded in July.
In monthly terms, the general CPI increased by 0.3% in August 2023, compared to a rise of 0.5% in August 2022.
“The surprising fall of the inflation in uk caused a hasty sale of the pound sterling, since today’s data reinforces expectations that the next rate hike of the Bank of England could be the last,” writes Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
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Bank of England: raise or maintain rates?
Remember that this Thursday there is a meeting of the Bank of England and that the consensus expects a increase of 25 basis points. The question is, precisely, whether this will be the last increase or the organization will leave the door open to more increases.
The largest downward contributions to the monthly variation of the inflation came from food, whose prices rose less in August 2023 than a year ago, and from accommodation services, whose prices can be volatile and they fell in August 2023, explains the ONS. The rise in fuel prices contributed the most to the variation in annual rates.
“The fall of the general inflation rate in August will probably not stop the Monetary Policy Committee from going ahead and raising the bank rate to 5.50%, from 5.25%, this week, but it will support arguments for more neutral language regarding a further hardening in the minutes and a pause in November,” write the Pantheon Macroeconomics experts.
Source: Ambito
