Inflation stays at 0.6% despite rising food prices

Rising food prices and air fares pushed up inflation last month. Picture: Phil Wilkinson

Rising food prices and air fares pushed up inflation last month. Picture: Phil Wilkinson

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Inflation trod water at 0.6 per cent last month, official data showed yesterday, with City economists saying it paved the way for the Bank of England to possibly cut interest rates further to nearer zero per cent.

The Office for National Statistics (ONS) said rising food and transport prices were offset by a fall in the cost of clothing, wine and hotels to leave the consumer prices index (CPI) unchanged in August after increasing in June and July by 0.5 per cent and 0.6 per cent respectively.

READ MORE: Inflation rises to 0.6% on higher petrol prices

Economists had forecast a inflation rise of 0.7 per cent. The ONS said there was “little sign” of the plunge in the value of sterling to 31-year lows against the dollar and near-eight year lows against the euro following the Brexit vote being passed through to consumer prices.

However, Howard Archer, chief UK economist at IHS Global Insight, said the “stabilisation” of inflation was likely to be temporary as weak sterling fuels higher import prices.

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