According to the Office for National Statistics’ latest figures, the inflation rate has remained at 2.2%.
The Consumer Price Index (CPI), which measures consumer prices, remained unchanged at 2.2% for the year ending August 2024.
CPIH, which includes owner-occupiers housing costs, was also unchanged in August from the previous year, at 3.1%.
The Retail Prices Index (RPI), which is not an official statistic, but used by unions to negotiate pay, was 3.5% for the year ending August, a slight decrease from the 3.6% figure in July.
According to the latest CPI figures, inflation is still slightly higher than Bank of England target of 2%. The BoE is expected to reduce interest rates tomorrow when the monetary policy committee of the Bank of England meets.
Grant Fitzner said that inflation was “stable” in August, as falls in prices in certain areas were offset by increases in other areas.
He said that the main movement was in air fares. In particular, he noted, they were up significantly each month, after a decline at this time last. This was offset by cheaper prices at the gas station and falling costs in restaurants and hotels. The prices of alcohol in shops fell this month but were higher at the same period last year.
Julian Jessop is an economist at the Institute of Economic Affairs. He said that the majority of the increase was due to a rise in air fares. These fluctuate from year-to-year depending on when school holidays fall. The Bank’s Monetary Policy Report also predicted a lower level of inflation in services than what actually occurred. The MPC has not seen the spiral of wage-price that some fear.
The Bank has already indicated that it will ignore this temporary effect. The economy is still slowing down, the labor market is cooling and interest rates are too high to keep inflation in check.
Martin Sartorius said, “Inflation fell short of Bank of England forecast expectations for the 2nd month in a Row. The news will be welcome by both households and businesses. However, they will still feel the pinch of three years of high cost growth.
The Bank’s Monetary Policy Committee may be reassured today by the data, but they will likely remain cautious about easing policy too soon. The Bank of England’s Monetary Policy Committee is likely to be reassured by today’s data, but they will remain cautious about loosening policy too quickly. This should lead to a gradual path of interest rate reductions going forward. Rates are likely to remain unchanged this month.”
Incomes Data Research released findings last week that revealed the UK media pay deal reached by organizations fell to 4% during the three-month period ending in July. This is down 0.8 percentage point from the three-month period ending in June and the lowest level since August 2022.
Brightmine reported in its last monthly report that the median pay award for the three-month period from May to July this year fell to 4.5%. Next week, Brightmine will publish its next monthly report regarding pay settlements.
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