UK August CPI Hits 18-Month Low, Signaling Economic Relief

The UK recently announced that the monthly CPI rate for August was 0.3%, lower than the expected 0.70%. Additionally, the annual rate stood at 6.7%, below the anticipated 7.00%. This unexpected drop marks the lowest level in 18 months, alleviating pressure on the Bank of England to raise interest rates further.

According to data released by the Office for National Statistics (ONS), the annual Consumer Price Index (CPI) in the United Kingdom rose by 6.7% in August, showing a slowdown from the 6.8% increase in July. Market consensus had predicted a 7.1% rise.

Specifically, the Core CPI index, which excludes volatile food and energy items, increased by 6.2% year-on-year in August, compared to a 6.9% acceleration in July, falling short of the estimated 6.8% rate.

The Services CPI, reflecting the cost of services, rose by 6.8% year-on-year, slightly lower than July’s 7.4% surge. The ONS highlighted that food and accommodation services made the most significant contributions to the decrease in CPI rates.

Meanwhile, the UK Consumer Price Index rebounded with a 0.3% month-on-month increase in August, differing from the estimated 0.7% and the 0.4% decline recorded in July.

In contrast, the UK Retail Price Index (RPI) for August rose by 0.6% month-on-month and 9.1% year-on-year, both missing expectations.

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