The UK's annual inflation rate held steady at 2.2% in August 2024, the same as in July, according to the latest data from the Office for National Statistics.
The largest contributors to the rise came from airfares, which saw an increase of 11.9%, primarily on European routes. Other upward pressures included recreation and culture, which rose 4%, and transport, driven by a slower decline in second-hand car prices.
Month-on-month, the consumer price index (CPI) rose by 0.3%, reversing the 0.2% decline seen in July.
Core inflation, which excludes volatile items like food and energy, remained elevated, rising to 3.6% from 3.3% in the previous month.
This persistent core inflation has sparked debate over the direction of interest rates in the coming months.
Myron Jobson, senior personal finance analyst at interactive investor, stated: “The fact that core inflation, which strips out volatile food and energy prices, remains elevated, ticking higher in August, probably shores up the argument that Bank of England policymakers are likely to hold interest rates tomorrow, as it awaits a major economic puzzle piece to justify a further reduction to the base rate.”
According to Tom Stevenson, investment director at Fidelity International: “The mixed messages in today’s inflation data underline the challenge the Bank of England faces in setting monetary policy in a less stable and predictable environment for prices.
“With the new Labour government pushing for higher growth and productivity, and without the stabilising forces of globalisation, cheap energy and EU membership, inflation is likely to be more volatile in future.”
“A victory lap on the inflation-fighting front would be extremely premature," stated George Lagarias, chief economist at Forvis Mazars, who contended that a November cut is on the cards.