UK inflation has dipped below double digits, the first decline in almost a year, largely thanks to falling fuel prices.
The headline consumer price index had been forecast to rise to 10.2% in August. But forecasts were overly gloomy. Instead, it dropped from its 40 year high in July of 10.1% to 9.9%. The easing reflects some respite at the petrol pumps: A litre of petrol fell from an average price of £1.90 in July to £1.75 during the month, as the cost of oil has been on a downwards trajectory.
That said, Britain’s inflation rate was still among the highest in the G7 in August although lower than both Spain and the Netherlands. The cost of food and domestic services shows no sign of easing. As the war in Ukraine continues to disrupt supply chains, food prices last month rose at their fastest pace since 2008, up 13.4% in August, compared to 12.8% in July. The cost of domestic services rose 5.9% higher in August, up from 5.7% in July, thanks to the UK’s tight labour market, made worse by the exodus of workers during the pandemic.