Drop in food and fuel costs push down UK inflation

OFFICIAL figures show that inflation in the UK eased further below the Bank of England’s target in August following falls in food and fuel prices.
UK inflation has eased further, according to new figures. Picture: PAUK inflation has eased further, according to new figures. Picture: PA
UK inflation has eased further, according to new figures. Picture: PA

The Office for National Statistics says consumer price inflation slowed to 1.5 per cent in August from 1.6 per cent in July, a move that likely reinforces market expectations that interest rates are unlikely to rise this year despite robust growth and falling unemployment. Bank of England Governor Mark Carney has already signaled that rates won’t start rising until spring next year.

Howard Archer of IHS Global Insight says the bank will likely “hold off from acting until February at the earliest.”

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Inflation has been below the bank’s 2 per cent target for eight months. In August, consumers benefited from declining fuel prices and supermarket price wars.

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