Inflation holds at 2.2% in August

Latest inflation data from the Office of National Statistics (ONS) has found that prices rose 2.2% over the 12 months to August 2024, the same rate as recorded the previous month.

The latest Consumer Price Index (CPI) data from the ONS sees inflation remain slightly above the Bank of England’s 2% target rate for the second consecutive month after falling to 2% in June. Month-on-month, prices rose on average 0.3% from July to August.

Among the product categories pushing up average inflation was air fares, which rose by 22.2% between July and August 2024 and had been falling in price this time last year as the aviation sector continued to recover from impact of the Covid-19 pandemic. Petrol and diesel prices at the pump, however, fell slightly.

Restaurant and hotels also saw prices fall in August, while food and drink prices, which had been a key driver in pushing up inflation, saw a more modest 1.3% annual rate of inflation.

Private rents, which are not included in calculating inflation, also rose 8.4% on average compared to August last year, highlighting the pressures on household budgets that still persist in the economy despite inflation being close to the Bank of England’s target rate. This, alongside inflation remaining steady just above the Bank’s target, reinforces speculation that the Bank of England’s Monetary Policy Committee (MPC) will vote to hold interest rates at their current level when they next meet on Thursday 19th September. Forecasts now anticipate the next fall in the base rate to come at the MPC’s November meeting.