UK inflation remained unchanged in August at 3.8%, according to the latest figures from the Office for National Statistics (ONS).
The Consumer Prices Index (CPI) held steady for a second consecutive month, but households are continuing to feel the squeeze as food and drink prices rose for the fifth month in a row, reaching an annual rate of 5.1%.
A surge in vegetable, dairy and fish prices contributed to the increase, pushing food inflation to its highest level since January 2024.
Airfares, which eased back after July’s sharp spike, helped offset upward pressure from petrol, diesel and hotel costs. However, demand for restaurants and accommodation remained strong, adding to the overall rate.
ONS chief economist Grant Fitzner said: “The cost of airfares was the main downward driver this month. This was offset by a rise in prices at the pump and the cost of hotel accommodation falling less than this time last year. Food price inflation climbed for the fifth consecutive month, with small increases seen across a range of vegetables, cheese and fish items.”
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The latest data will add to pressure on Chancellor Rachel Reeves ahead of the autumn Budget. Reeves said: “I know families are finding it tough and that for many the economy feels stuck. That’s why I’m determined to bring costs down and support people who are facing higher bills.”
Analysts warned inflation is likely to edge higher in the months ahead. Luke Bartholomew, deputy chief economist at Aberdeen, commented: “Despite being well ahead of the inflation target, the Bank of England will take some comfort in the fact that inflation came in largely as expected. However, food price growth remains elevated, which policymakers are concerned could cause wider inflation expectations to bleed higher. Inflation is likely to move a little higher in the near term, peaking around 4%.”
The Bank of England is expected to keep interest rates on hold when it meets tomorrow.
