UK inflation rate fell to 6.7% in August

A employee arranges produce inside a Sainsbury’s supermarket in Richmond, west London, Britain, June 27, 2022. Picture taken June 27, 2022. REUTERS/Henry Nicholls

LONDON  – British annual consumer price inflation (CPI) unexpectedly fell to 6.7 percent in August, official data showed on Wednesday, a day before the Bank of England is expected to raise rates again.

Economists polled by Reuters had forecast CPI would rise to 7 percent from July’s 6.8 percent as a jump in fuel prices and an increase in a tax on alcoholic drinks helped to push up the annual inflation rate for the first time since February.

The BoE said last month that it expected inflation in August would rise to 7.1 percent before falling sharply to around 5 percent in October which would still be more than double its 2 percent target.

READ: UK inflation to be highest among big economies in 2023 – OECD

It is expected to raise interest rates for the 15th time in a row on Thursday, taking Bank Rate to 5.5 percent from 5.25 percent . Many economists and investors think that could be the last hike in the BoE’s tightening cycle as Britain’s economy slows.

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Core inflation – which strips out volatile food and energy prices – fell to 6.2 percent from 6.9 percent in July. The Reuters poll had pointed to a reading of 6.8 percent in August.

Sterling fell sharply against the U.S. dollar and the euro after the release of the data by the Office for National Statistics.