Inflation has fallen to 6.7 per cent in August, the sixth consecutive month of slowing price rises, it has been reported.
A rise in Consumer Price Index inflation, driven by higher oil prices in August, had been widely expected, with City experts projecting a reading of seven per cent.
Instead, the pace of price rises declined again from July’s 6.8 per cent, in the latest sign that the Bank of England’s rate rises seem to be working.
The rate of inflation is an important figure for a lot of people as it dictates changes in the cost of goods and services over a certain time.
The Office forNational Statistics (ONS) regularly releases updated figures in regard to consumer price inflation, producer price inflation, and the House Price Index. The annual rate of inflation reached a 41-year high at 11 per cent in August 2022 but has been steadily declining since then.
Financial bosses have so far been sceptical that the Bank of England is getting inflation under control. What’s more, a Bank of England expert warned that slashing interest rates or maintaining the current level could contribute to higher inflation in the economy.
At the same time, the pace of wages has recently outstripped inflation for the first time in two years.
When is the next inflation figures announcement?
The latest figures were announced on September 20.
Consumer price inflation for September will be released on October 18.
What has been said?
Chancellor of the Exchequer 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.”
George Lagarias, chief economist at Mazars, said: “Inflation is on the mend.
“The figure comes upon the heels of a significant upward revision to growth. While current high rates may continue to reduce economic activity, slowing inflation means that the central bank may unshackle the economy quicker than previously anticipated.”
How does inflation affect the cost of living?
Inflation rates monitor how much prices have changed over a certain period of time. Many factors can affect this, including a surge in demand or increased production costs.
When looking at the cost of living, higher interest rates mean you would pay more for products that may have previously been more affordable. This particularly affects people who are on a lower wage and might not be able to afford goods and services any more.
Prices are now rising at their slowest rate since February 2022 but many consumers are still concerned about rising food and travel costs.
The ONS has released an inflation calculator to help people understand their personal inflation rate and identify the main causes behind why their cost of living is rising.