According to the report from the Office for National Statistics (ONS), in August consumer prices rose by 2.2% per year after a similar increase in July. Economists also expected prices to rise by 2.2%. On a monthly basis, the consumer price index rose by 0.3%, as expected, after a 0.2% decline in July.
The ONS said that the largest upward contribution to the CPI annual rates came from air fares, which rose this year but fell a year ago. Meanwhile, the largest offsetting downward contributions came from motor fuels, and restaurants and hotels.
Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - rose by 3.6% per annum (the highest value since April) after an increase by 3.3% in July. Consensus estimates suggested an increase by 3.5% per annum. The CPI goods annual rate fell from -0.6% to -0.9%, while the CPI services annual rate rose from 5.2% to 5.6%. Stubborn services price growth has been in focus in recent months. On a monthly basis, core consumer prices rose by 0.4%, as expected, compared with the 0.1% increase in July. It was the seventh monthly increase in a row, but the first acceleration in four months.
The Bank of England expected inflation of 2.4% in August before rising to around 2.75% by the end of this year. Overall, the latest data has reinforced expectations that the Bank of England will leave the interest rate unchanged at tomorrow's meeting.