UK inflation remained stable at 2.2% in August, above the Bank of England’s target of 2%. Chief Secretary to the Treasury Darren Jones highlighted the struggles of millions of families due to high prices. Deloitte’s chief economist Ian Stewart hinted at a possible cut to UK interest rates. Despite stable inflation, the Resolution Foundation predicts interest rates will remain unchanged. The TUC’s Paul Nowak called for a rate cut to help the economy amidst stagnant growth.
While services inflation increased to 5.6%, goods prices continued to fall. The Core CPI, excluding certain items, rose to 3.6%. Factory gate inflation slowed, which may impact consumer prices in the future. The money markets suggest a lower likelihood of a rate cut by the Bank of England following the inflation report. Despite stable headline inflation, the Bank may be cautious due to rising core and services inflation rates.
Overall, inflation in the UK remains a concern, with underlying inflation ticking up. The effects of rising prices are being felt by many families, prompting calls for action from both government officials and economists. The future trajectory of interest rates and inflation will be closely monitored by policymakers as they navigate economic challenges.
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