Office for National Statistics figures showed that real wages in the UK over the three months to May saw their biggest decline since records began in 2001.
Henry Nichols | Reuters
LONDON – Inflation in the United Kingdom slowed in August on the back of lower fuel prices, although food prices continued to rise as the country’s cost of living crisis persisted.
The consumer price index rose 9.9% annually, according to estimates released Wednesday by the Office for National Statistics, slightly below expectations of 10.2% among economists polled by Reuters. It is also down from the July figure of 10.1%.
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On a monthly basis, consumer prices rose 0.5%, partly below expectations. Core inflation, which does not include volatile energy, food, alcohol and tobacco, rose 0.8% month over month and 6.3% year over year, in line with expectations.
“The decline in motor fuel prices was the largest downward contribution to the change in annual inflation rates for both CPIH and CPI between July and August 2022,” the National Bureau of Statistics said in its report.
“Rising food prices led to the largest partially balanced upward contribution to the change in prices.”
The UK was hit by a historic cost-of-living crisis this year as food and energy prices skyrocketed and wage increases failed to keep pace with inflation, leading to one of the steepest declines in real wages ever.
last week new British Prime Minister Liz Truss announced an emergency financial package Capping annual home energy bills at £2,500 ($2881.90) for the next two years, with an equivalent guarantee for businesses over the next six months and more pipeline support for vulnerable sectors.
Analysts expect that the measures – which are estimated to cost the public treasury around £130 billion – will sharply reduce inflation expectations in the short term, but increase them in the medium term.
It might be a coincidence
The Bank of England It is scheduled to announce its latest monetary policy decision next Thursday, after a delay due to The death of Queen Elizabeth IIIt is widely expected to opt for a sharp 75 basis point increase in interest rates as this appears to bring down inflation.
At its last meeting, the bank expected inflation to peak at 13.3% before the end of the year, and policy makers will reassess their forecasts in light of Truss’ new energy cap announcement.
“Hopefully, the cap on energy bills could mean inflation is now approaching a peak, although last month’s drop may be just a coincidence and we could see a spike in inflation in the coming months,” said Richard Carter, head of fixed interest. Search the Quilter Cheviot.
“While the energy plan may help, it comes at the cost of higher levels of government borrowing and spending which may encourage the BoE to raise rates more than originally expected.”
