Inflation falls in August

THE headline rate of inflation returned to its downward trend in August, new figures revealed this morning.

CPI inflation fell from 2.6% to 2.5% while the broader RPI measure fell from 3.2% to 2.9%.

A surprise increase last month had raised concerns that inflation would not fall back towards the Bank of England’s 2% target as forecast.

And while today’s figures will be welcomed by policymakers, they were accompanied by fresh warnings that higher food and fuel prices expected at the end of the year are likely to push the CPI rate up again.

Coverage of the inflation figures is brought to readers of TheBusinessDesk.com in partnership with stockbrokers Redmayne-Bentley.

Lauren Charnley, from Redmayne-Bentley, said: “Inflation slowed somewhat as expected during August, to 2.5%, from 2.6% a month earlier. Investors are clearly concerned over rising prices as we see a rise in demand for commodities and direct equities in an effort to hedge against inflation.

“Smaller increases in prices for clothing, footwear and household goods contributed to the fall, offset by rising fuel prices. This slowdown is likely to increase speculation that the Bank of England will initiate another bout of quantitative easing.”