Official figures show: The UK inflation rate held steady at 0.6 per cent in August, official figures from the Office for National Statistics showed. The UK inflation rate, as measured by the Consumer Prices Index (CPI), was unchanged from July. While rising food prices and air fares pushed prices higher, hotel rooms costs dropped.
The Retail Prices Index (RPI) measure of inflation dropped to 1.8 per cent in August from 1.9 per cent in July.
Prices of materials and fuels bought by UK manufacturers was up 7.6 per cent and price of goods leaving the factory also rose 0.8 per cent.
Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said: “While the inflation rate was unchanged in August, price growth is likely to resume its upward trend in the coming months. The marked pick-up in the cost of raw materials suggests that the declining value of the pound is already feeding through into input costs and is likely to push inflation higher in the near-term. A future rise in inflation will likely dampen household spending by eroding consumer spending power, but price rises will be dampened if the UK economy slows as we predicted in our economic forecast earlier this week. The priority for the government and Bank of England must be to boost business confidence by supporting business investment and increasing investment in our infrastructure.”
Ben Brettell, senior economist at Hargreaves Lansdown, said: “It is clear businesses importing materials from abroad are facing significantly higher costs. These companies must choose whether to absorb the increase or pass it on to consumers. “Assuming at least some will choose the latter route, this could lead to higher consumer prices down the line.”