UK inflation fell unexpectedly as a drop in hotel and air fare costs and a slowdown in food price rises helped offset a jump in fuel costs, according to official figures.
The Office for National Statistics (ONS) said inflation was 6.7 per cent in August, down from 6.8 per cent in July, defying chancellor Jeremy Hunt’s suggestions that the UK may experience a “blip” amid rising fuel prices.
It marks the lowest rate since February last year. Analysts had predicted inflation to accelerate last month to a reading of 7.1 per cent due to a sharp rise in motor fuel amid a rebound in oil prices.
Grant Fitzner, the ONS’s chief economist, said: “The rate of inflation eased slightly this month driven by falls in the often-erratic cost of overnight accommodation and air fares, as well as food prices rising by less than the same time last year.
“This was partially offset by an increase in the price of petrol and diesel compared with a steep decline at this time last year, following record prices seen in July 2022. Core inflation has slowed this month by more than the headline rate, driven by lower services prices.”
Chancellor Jeremy Hunt said: “Today’s news shows the plan to deal with inflation is working – plain and simple.
“But it is still too high which is why it is all the more important to stick to our plan to halve it so we can ease the pressure on families and businesses.
“It is also the only path to sustainably higher growth.”
Despite the fall in the Consumer Price Index, shadow chancellor Rachel Reeves said: “The UK is forecast to have the highest inflation of any major economy this year.
“The Prime Minister is too weak to turn things around, while his predecessor Liz Truss continues to call for the same policies that crashed the economy this time last year.
“The Conservatives have wreaked havoc and working people are paying the price.”
She claimed a Labour government would “grow our economy so we can increase living standards, bring down bills and make working people in all parts of the country better off”.