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UK inflation held steady at 2.2 per cent in August, leaving the door open for the Bank of England to cut interest rates further this year.
The annual increase in consumer prices, reported by the Office for National Statistics on Wednesday, was unchanged from July’s rate and matched the expectations of economists polled by Reuters.
Inflation has now been slightly above the BoE’s 2 per cent target for two consecutive months.
The BoE cut rates by a quarter point to 5 per cent in August — the first reduction in more than four years — and signalled it would lower borrowing costs again if inflation eased further.
The Bank’s Monetary Policy Committee will announce its latest rate decision on Thursday. The BoE has been wary of declaring victory prematurely over inflation.
Services inflation, the BoE’s key measure of domestic price pressures, rose to 5.6 per cent, marginally above economists’ expectations of 5.5 per cent and up from 5.2 per cent in July.
Core inflation, which strips out volatile food and energy prices, was 3.6 per cent in August compared with 3.3 per cent in July. Sterling edged higher following the figures, climbing 0.13 per cent to $1.3178.
Darren Jones, chief secretary to the Treasury, said: “Years of sky-high inflation have taken their toll; and prices are still much higher than four years ago. So, while more manageable inflation is welcome, we know that millions of families across Britain are struggling”.
This is a developing story
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