UK inflation unexpectedly fell to 9.9% as fuel prices fell | Daily News Byte

LONDON – UK inflation slowed in August as fuel prices fell, although food prices continued to rise as the country’s cost-of-living crisis persisted.

The consumer price index rose 9.9% year-on-year, according to an estimate published by the Office for National Statistics on Wednesday, partly below a consensus estimate of 10.2% among economists polled by Reuters. It was also down from July’s figure of 10.1%.

Month-on-month, consumer prices rose 0.5%, a fraction below forecasts. Core inflation, which excludes volatile energy, food, alcohol and tobacco, rose 0.8% month-on-month and 6.3% year-on-year, in line with expectations.

“The fall in motor fuel prices led to the largest reduction in the change in CPIH and CPI annual inflation rates between July and August 2022,” the ONS said in its report.

“Rising food prices made the largest, partially offsetting, upward contribution to the change in rates.”

Sterling The dollar was roughly flat against the dollar on Wednesday morning, trading at around $1.1490.

The UK has faced a historic cost-of-living crisis this year as food and energy prices skyrocket and pay rises have failed to keep pace with inflation, leading to the sharpest fall in real wages on record.

Last week, new British Prime Minister Liz Truss announced an emergency fiscal package capping annual household energy bills at £2,500 ($2,881.90) for the next two years, with matching guarantees for businesses in the next six months and more support for vulnerable people in the pipeline. fields

Analysts expect the measures – estimated to cost the public purse around £130 billion – to sharply reduce the outlook for inflation in the short term, but raise it over the medium term.

The Bank of England is set to announce its latest monetary policy decision next Thursday after a delay due to the death of Queen Elizabeth II, and is widely expected to opt for a sharp 75 basis point rise in interest rates as it drags down inflation. .

At its last meeting, the bank forecast that inflation would peak at 13.3% before the end of the year, and policymakers will reassess their outlook in light of the Truss’ announcement of a new energy cap.

“Hopefully, the cap on energy bills could mean that inflation is now close to peaking, although last month’s dip may be likely and we could see inflation move higher in the coming months,” said Richard Carter, head of fixed interest. Richard Carter said. Research at Quilter Cheviot.

“While the energy plan could help, it comes at the cost of higher levels of borrowing and government spending that could prompt the Bank of England to raise rates even further than originally expected.”