According to official data, UK inflation remained unchanged at 3.8% in August, keeping pressure on households and businesses as the Bank of England prepares to leave borrowing costs at elevated levels.
Figures from the Office for National Statistics (ONS) confirmed that the consumer price index stayed at July’s level, which aligns with city economists’ forecasts. With inflation almost double the 2% target, financial markets widely expect the Bank to hold rates at 4% on Thursday.
The ONS said price movements balanced each other out last month. Air fares and hotel accommodation helped lower inflation, but rising fuel costs and higher food prices offset these declines. Food inflation accelerated for a fifth consecutive month, climbing from 4.9% in July to 5.1% in August. Vegetables, cheese, fish, and coffee became more expensive, while chocolate prices rose by more than 15%.
The figures arrive as Chancellor Rachel Reeves faces growing scrutiny over Labour’s economic plans ahead of the Autumn Budget on 26 November. Business groups have warned that measures already announced, including a £25 billion increase in employer national insurance contributions, could force job cuts and higher prices.
Reeves insisted the Government was acting to support households, while shadow chancellor Mel Stride accused Labour of economic mismanagement.
Although consumer service inflation eased slightly to 4.7% and core inflation fell to 3.6%, analysts warned that stubborn price pressures remain. The ONS will publish retail sales and public finance data on Friday.
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