UK Inflation rate holds steady at 2.2% despite rise in air fares

UK Inflation rate holds steady at 2.2% despite rise in air fares


The 22% rise in air fares was between July and August. Air fares usually rise in the summer, but this was the second largest rise in airfares since 2001, the ONS said.

Overall, services, which includes hospitality as well as transport, saw prices rise at 5.6%, up from 5.2% in the year to July.

However, motor fuel prices fell 3.4% over the year.

Falling costs at restaurants and hotels also meant prices in those sectors rose at 4.4% in the year to August, a slowdown from previous months.

Darren Jones, Chief Secretary to the Treasury said while lower inflation was welcome, the government understood “that millions of families across Britain are struggling”.

“Years of sky-high inflation have taken their toll; and prices are still much higher than four years ago,” he added.

The Bank of England expects inflation to tick higher again in the second half of this year, with household energy bills rising again in October.

But prices are not forecast to rise as steeply as they did in 2022 and 2023, which prompted the Bank to raise interest rates to 5.25%

The Bank cut interest rates for the first time since the crisis at the start of August, after inflation came down to its target of 2% in May and June, but is expected to hold them on Thursday.

“Today’s data are unlikely to unlock another rate cut by the Bank of England tomorrow,” Yael  Selfin, chief economist at KPMG UK, said.

“While we expect the Bank of England to look beyond the anticipated higher headline inflation, services inflation remains elevated.”



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.