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Inflation stable at 2.2 per cent in August

Inflation stable at 2.2 per cent in August
Photo: iStock

British inflation was unchanged at 2.2 per cent in August, official data showed Wednesday, fuelling expectations that the Bank of England will not cut interest rates again at its meeting this week.

The Consumer Prices Index was at the same level as in July, the Office for National Statistics said.


The steady annual inflation rate cemented analyst expectations that the central bank would likely avoid cutting rates again at the end of its regular two-day policy meeting on Thursday.

The BoE trimmed borrowing costs in August for the first-time since the onset of the Covid pandemic in early 2020 and after UK inflation retreated from four-decade highs, briefly meeting its two-percent target in May before edging back up.

"Years of sky-high inflation have taken their toll; and prices are still much higher than four years ago," Darren Jones, a senior official at the UK Treasury, said in response to Wednesday's data.

The main inflationary movements in August came from large monthly rises to airfares, particularly for European destinations, noted Grant Fitzner, chief economist at the ONS.

"This was offset by lower prices at the pump as well as falling costs at restaurants and hotels," he added.

Core Inflation - which excludes volatile items like food and energy - came in at 3.6 per cent in the 12 months to August, up from the 3.3 per cent in July, signalling persistent price pressures.

Prices of alcohol and tobacco overall were little changed between July and August, compared with a rise of 1.5 per cent a year ago. On an annual basis, prices rose by 5.7 per cent in the year to August 2024, down from 7.2 per cent in the year to July, and the lowest annual rate since March 2023.

In the food and non-alcoholic beverages category, prices went up by 0.2 per cent between July and August, compared with a rise of 0.3 per cent a year ago. The annualised inflation stood at 1.3 per cent in August, as against 1.3 per cent in July.

Commenting on the figures, the British Independent Retailers Association (Bira) said the inflation rate holding steady in August provides some stability for the high street - but stressed that the Bank of England needs to now reduce interest rates to boost consumer spending.

“We're pleased to see inflation has remained static, although consumer spending on the high street for non-essential items remains depressed. With inflation not rising, we hope the Bank of England will reduce interest rates to boost consumer confidence,” Andrew Goodacre, Bira chief executive, said.

“Reducing interest rates is crucial to fully restoring consumer confidence and bringing people back to the high streets. We are approaching the golden quarter for retail, and we need to see consumer confidence and spend improve,” he added.

The Bank of England is expected to keep interest rates unchanged at 5 per cent when it meets on Thursday.

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A whopping ninety-one per cent of respondents to a survey conducted by the Federation of Independent Retailers (the Fed) called for more police patrols on streets, while a similar number - 90 per cent - said that shoplifters should be handed harsher sentences.

Seven out of 10 respondents (72 per cent) said their stores had experienced shoplifting, break ins and damage to property, while they and their staff had been physically or verbally threatened.

Just under half of respondents (47 per cent) said they and their employees had been threatened or had suffered abuse and violence when asking for proof of age ahead of selling an age-restricted product.

Forty-four per cent reported that they and their staff had faced abuse or violence because they had refused to make a proxy sale – selling an age restricted product to a customer buying for a minor.

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“From the responses we received, it is clear that real action is needed by police, by courts and by the government to stem the overwhelming tide of crime against retailers and their staff. Everyone deserves to feel safe at work and for their businesses to be protected against criminals.

“Fed members are also sending a clear message that one of the catalysts for verbal and physical abuse in stores is asking for proof of age before selling an age restricted product. If the government presses ahead with its plans to phase out smoking and vaping through a progressive ban to gradually end the sale of tobacco products across the country, independent retailers will be subject to even greater levels of violence, abuse and theft.”

Calling for action from the government and not just words, Mr Razzaq continued: “Without effective deterrent, criminals and opportunistic members of the public will continue to commit crimes.”

According to Ministry of Justice statistics, during the year to March 2024, 431 fines were handed out for retail theft under £100, while Home Office statistics for the same period show that 2,252 cautions were accepted for shoplifting.