Inflation holds steady ahead of interest rate decision

Inflation remained stuck at 2.2% in the 12 months to August, unchanged from July.

The new figures from the Office for National Statistics (ONS) released this morning (September 18) shows that factory gate prices rose by 0.2% in the year to August, down from an increase of 0.8% in the year to July.

Meanwhile, the cost of raw materials fell 1.2% in the year to August, down from a revised increase of 0.2% in the year to July.

Grant Fitzner, chief economist at the ONS, said: “Inflation held steady in August various price fluctuations offset each other.

“The main movements came from air fares, in particular to European destinations, which showed a large monthly rise, following a fall this time last year.

“This was offset by lower prices at the pump as well as falling costs at restaurants and hotels. Also, the prices of shop-bought alcohol fell slightly this month, but rose at the same time last year.

“Following two months of growth, raw materials prices fell, drive by lower crude oil prices, while the increase in the cost of goods leaving factories slowed again.”

The new figures come ahead of the Bank of England’s decision on interest rates, set for tomorrow (Thursday).