Inflation holds steady but price pressures remain – Chamber

The UK rate of inflation held at 2.2 per cent in August, reducing the chances of a further cut in interest rates, business leaders said today.

The Office for National Statistics (ONS) said inflation held steady in the year to August, despite a jump in the cost of flights.

The rise in air fares, in particular to European destinations, was offset by lower fuel prices and prices in restaurants increasing more slowly.

The latest figure means overall inflation remains slightly above the Bank of England’s target of 2 per cent.

However, it is significantly lower than at the peak of the cost of living crisis in 2022.

The Bank of England’s Monetary Policy Committee is expected to keep interest rates unchanged at 5 per cent when it meets tomorrow.

Most economists think a cut is likely at the next meeting in November.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce, said: “The fact that the rate of inflation held steady in August would have given policymakers at the Bank of England plenty of food for thought this morning.

“Whilst many businesses would like to see a further cut in interest rates, the Monetary Policy Committee will no doubt highlight the fact that service inflation and core inflation both went up last month which makes the prospect of a rate reduction less likely.

“Underlying price pressures also remain prevalent for local firms - as evidence in early analysis from our latest Quarterly Business Report.

“Businesses will want to the see Government working in tandem with the Bank of England to reduce the cost pressures many endure on a daily basis - the Autumn Budget is the perfect platform to set out a confidence boosting plan.”