U.K. Despite food costs continuing to climb due to the country’s ongoing cost of living problem, inflation dropped in August due to a decline in fuel prices.
Estimates released on Wednesday by the Office for National Statistics indicated that the consumer price index increased by 9.9% yearly, which was somewhat less than the consensus estimate of 10.2% among economists surveyed by Reuters. Additionally, it was lower than July’s 10.1% figure.
Consumer prices increased 0.5% month over month, which was little less than anticipated. Core inflation, which does not include volatile prices for things like energy, food, alcohol, and cigarettes, was expected to be 0.8% on a monthly basis and 6.3% on an annual basis.
“A fall in the price of motor fuels made the largest downward contribution to the change in both the CPIH and CPI annual inflation rates between July and August 2022,” in its report, the ONS made a statement.
“Rising food prices made the largest, partially offsetting, upward contribution to the change in the rates.”
The U.K., t his year, has experienced one of the biggest reductions in real earnings on record as a result of the nation being rocked by a historic cost-of-living crisis brought on by skyrocketing food and energy prices as well as pay increases that have not kept up with inflation.
Last Monday, Liz Truss, the new British prime minister, unveiled an emergency fiscal package that would cap annual family energy costs at £2,500 ($2,881.90) for the next two years, with an identical guarantee for companies for the following six months. Additional support for vulnerable industries is also in the works.
Analysts predict that the actions, which are projected to cost the public purse some £130 billion, will significantly improve the inflation picture over the medium term but significantly worsen it in the short term.
Following a delay caused by the passing of Queen Elizabeth II, the Bank of England is scheduled to publish its most recent monetary policy decision on Thursday. It is largely anticipated that the Bank of England will choose to raise interest rates sharply by 75 basis points in an effort to contain inflation.