Home Business News Inflation falls which could take pressure of Bank of England to lift interest rates

Inflation falls which could take pressure of Bank of England to lift interest rates

by LLB Finance Reporter
20th Sep 23 10:28 am

In August inflation unexpectedly eased due to a slowdown in food prices which helped offset a rise in fuel costs and there was a fall in hotel and air fare costs.

In August the Consumer Prices Index (CPI) inflation was 6.7%, which is down from 6.8% in July, the Office for National Statistics (ONS) said.

The fall in inflation could now take the pressure of the Bank of England (BoE) to raise interest rates on Thursday, as it is expected they will raise the base rate by 25 percentage points to 5.5%.

Chancellor Jeremy Hunt claims the fall shows “the plan to deal with inflation is working – plain and simple.”

He added, “But it is still too high which is why it is all the more important to stick to our plan to halve it so we can ease the pressure on families and businesses.

“It is also the only path to sustainably higher growth.”

Grant Fitzner, the ONS’s chief economist, said, “The rate of inflation eased slightly this month driven by falls in the often-erratic cost of overnight accommodation and air fares, as well as food prices rising by less than the same time last year.

“This was partially offset by an increase in the price of petrol and diesel compared with a steep decline at this time last year, following record prices seen in July 2022.

“Core inflation has slowed this month by more than the headline rate, driven by lower services prices.”

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