- Headline CPI sticks at 3.8% in August
- Food inflation rises for fifth consecutive month to 5.1% – the highest level since January 2024
- Rising prices in restaurants, hotels and at the pump offset falls in airfares
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK inflation figures:
“There are no surprises in this latest set of inflation figures, just a growing pain in the purse – especially when it comes to the supermarket checkout.
“For households, the unwelcome increase in food prices for the fifth month in a row leaves little wiggle room. Whilst we are nowhere near those double digit increases that peaked in early 2023, consumers are becoming increasingly concerned.
“They’ve already traded down to generic brands and changed buying habits, and despite inflation-busting pay increases for many, few people feel they’re better off today than they were a couple of years ago.
“Businesses from food producers to supermarkets and restaurants have warned that they would need to pass on rising labour costs to their end consumer and this latest set of figures suggests that’s exactly what is happening.
“There was some good news in the latest data. Airfares, which played such a huge part in pushing up headline inflation in July’s data, have fallen back, thanks primarily to the timing of school holidays. But the price at the pump has risen and the cost of goods has edged up as well.
“For the Bank of England there is a silver lining to be found in both the core inflation number and service inflation, which have both fallen, but markets are under no illusion. At 3.8% inflation is way above the Bank’s target and prices are expected to keep rising in the near term.
“Looking further down the track, markets are hedging their bets on the potential for one final interest rate cut in 2025 as labour market weakness begins to impact remuneration decisions.”
