UK inflation hits 3.1% as fuel costs drive August uptick
UK consumer price inflation accelerated to 3.1% in August, up from 2.9% in July, the Office for National Statistics reported. Transport costs, particularly motor fuels, were the main driver. The rise keeps inflation above the Bank of England's 2% target, a day before the central bank is expected to hold rates.
Bottom line — UK CPI at 3.1% keeps pressure on the Bank of England to hold rates amid fuel-driven inflation.
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- The ONS said core CPI inflation remained unchanged at 2.6%, while services inflation held at 3.4%.
- Producer input prices rose 6.1% annually, with crude oil prices up 27% year-on-year, per the ONS.
- Analysts at Deutsche Bank predicted CPI will peak at around 3.5% in November, citing further energy price rises.
- Oxford Economics' Andrew Goodwin estimated fuel prices added 0.2 percentage points to CPI, based on weekly data showing a 7% month-on-month rise.
- Pantheon Macroeconomics suggested 'AI-flation' from chip shortages added another 0.2 percentage points, per chief UK economist Rob Wood.
- The BoE had forecast inflation at 2.8% for August, per Reuters.
- The US-Iran ceasefire collapse on July 8 pushed oil and gas prices higher, according to economists cited by LBC.