Inflation in the United Kingdom (U.K.) declined to 9.9% in August as energy costs, primarily
gasoline prices, eased from the previous month.
The Consumer Price Index (CPI) rose 9.9% annually, according to data from the Office for
National Statistics, below economists’ forecast of 10.2%.
August’s inflation reading was down from 10.1% in July of this year. Month-over-month, inflation
rose 0.5%, also lower than forecast. Core inflation, which excludes volatile food and energy
prices, rose 0.8% in August from July and 6.3% year-over-year, in line with forecasts.
The U.K. has been hit by a cost-of-living crisis this year as food and energy prices rise sharply
and pay increases fail to keep up with inflation, which has led to one of the sharpest declines in
real wages on record.
Last week, British Prime Minister Liz Truss announced a cap on household energy bills of
£2,500 ($2,881.90 U.S.) for the next two years, and an equivalent guarantee for businesses
over the next six months. The measure is estimated to cost the British government £130 billion.
The Bank of England is set to announce its latest monetary policy decision later in September
after a delay due to the death of Queen Elizabeth II and is expected to announce a 75-basis
point increase to interest rates.
At its last meeting, the central bank projected that inflation in the U.K. would peak at 13.3% by
year’s end.
