Headline inflation holds steady in August, as Bank of England struggles to meet target

Headline CPI inflation held steady in August at 3.8%, despite underlying price momentum moving in the wrong direction.

Food price inflation accelerated again, rising from 4.9% to 5.1% in August. Services inflation for the month was dragged down by typically volatile air fares.

price pressures will keep the Bank of England from cutting interest rates later this week, despite a weakening labour market.

We still expect the BOE to deliver a final cut before the end of the year to support weak activity.