UK inflation falls slightly to 9.9% but remains close to 40-year high

The rate of Consumer Prices Index (CPI) inflation fell to 9.9% last month from 10.1% in July but remained close to the highest rate in 40 years, according to the latest data from the Office for National Statistics (ONS).

14 Sep 2022

The rate of Consumer Prices Index (CPI) inflation fell to 9.9% last month from 10.1% in July but remained close to the highest rate in 40 years, according to the latest data from the Office for National Statistics (ONS).

Inflation eased because of a monthly fall in petrol and diesel prices, while food and clothing became more expensive. Economists had expected a further small rise to 10.2% in the headline rate.

Prices rose by 0.5% in August when compared to July, according to the ONS.

Food and non-alcoholic beverages prices made the largest upward contribution to the monthly rates in August 2022, while falling prices for motor fuels resulted in a large downward contribution.

The annual rate for motor fuels eased from 43.7% to 32.1% between July and August.

Paul Dales, Chief UK Economist at Capital Economics, commented: 'Overall and core UK CPI inflation haven't peaked yet. As such, the Bank of England will have to continue turning the screws.

'We think CPI inflation will peak around 11.0% just before the end of the year, and that core inflation will continue to edge higher too. That means the Bank will have to continue raising interest rates from 1.75% now to 3.00%, if not higher.'

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