Inflation holds steady ahead of rates decision

Inflation in the UK remained unchanged at 2.2% in August, according to the Office for National Statistics (ONS), aligning with economists’ predictions. However, core inflation increased to 3.6%, up from 3.3% in July. The Bank of England, which recently cut rates for the first time since the pandemic, is expected to proceed cautiously due to ongoing inflationary pressures. With regular pay growth exceeding 5% and unemployment at 4.2%, the labour market remains tight. The Bank’s forecasts indicate inflation could rise to just under 3% by year-end as the impact of lower energy prices diminishes.