Inflation in the UK falls to 9.9% as fuel prices drop

Date:

Share post:

According to figures released Wednesday by the Office for National Statistics, the consumer price index increased 9.9% year on year.

Last Monday, Liz Truss, the new British Prime Minister, unveiled an emergency fiscal package that would freeze yearly family energy prices at £2,500 ($2,881.90) for the next two years.

LONDON — The United Kingdom Inflation dropped in August as fuel costs fell, but food prices continued to grow as the country’s cost-of-living crisis persisted.

According to the Office for National Statistics, the consumer price index grew 9.9% year on year, a touch less than the 10.2% predicted by economists polled by Reuters. It was also lower than the previous month’s number of 10.1%.

Consumer prices grew 0.5% month on month, little less than expected. Core inflation, which excludes volatile energy, food, alcohol, and tobacco, increased 0.8% month on month and 6.3% year on year, as expected.

A decrease in the price of motor fuels contributed the most to the change in both the CPIH and CPI annual inflation rates between July and August 2022,” the ONS stated in its report.

Rising food prices contributed the most, somewhat offsetting, upward contribution to the rate change.

On Wednesday morning, sterling remained essentially unchanged versus the dollar, trading at approximately $1.1490.

The U.K. This year has seen a historic cost-of-living crisis as food and energy costs spike and wage increases fail to keep pace with inflation, resulting in one of the biggest drops in real wages on record.

Last week, new British Prime Minister Liz Truss announced an emergency fiscal package that will cap annual household energy bills at £2,500 ($2,881.90) for the next two years, with an equivalent guarantee for businesses over the next six months and additional support for vulnerable sectors in the pipeline.

Analysts predict that the measures, which are expected to cost the government roughly £130 billion, will substantially cut the short-term inflation forecast while increasing it in the medium run.

Could likely be a fluke

Following a postponement due to the death of Queen Elizabeth II, the Bank of England is slated to publish its next monetary policy decision next Thursday, and is widely expected to opt for a steep 75 basis point increase in interest rates in order to drag down inflation.

The Bank forecasted that inflation would peak at 13.3% before the end of the year at its most recent meeting, and policymakers will reassess their forecast in light of Truss’s latest energy cap announcement.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

spot_img

Related articles

The Benefits of a Creative Subscription with Envato Elements

If you’re looking to find and use royalty-free images and other creative resources, it can be tough to...

Get an Additional ₹100 Cashback When You Pay with Domino’s Digital Wallet Partners

How does ₹100 cashback sound? Find out more about the additional cashback you can get when you pay...

Get Unlimited Access to DataCamp’s Library of Online Courses

DataCamp subscriptions enable access to over 300 courses, as well as projects, assessments, and additional content. Whether you're...

Why You Should Buy from DaMENSCH: The Best in Quality, Service, and Value

Buying products online can be dangerous; you never know if you’re getting an authentic product, or one that’s...