Inflation eases because of a fall in petrol and diesel prices while food and clothing become more expensive
Inflation in the UK eased slightly in August, falling to an annual rate of 9.9% from 10.1% in July, easing the pressure on households somewhat – but remained close to the highest rate in 40 years.
Inflation eased because of a fall in petrol and diesel prices while food and clothing became more expensive.
Food and non-alcoholic beverages made the largest upward contribution to the monthly rates in August 2022, while falling prices for motor fuels resulted in a large offsetting downward contribution.
Last week’s decision by the UK government to freeze energy bills at the April price cap level should limit the worst predictions for headline CPI [consumer prices index], however it won’t change the fact that inflation is likely to remain persistent for longer.
Stock markets in Europe, the US and Asia plunged after US inflation remained stubbornly high in August at 8.3% yesterday, down slightly from 8.5% in July and 9.1% in June, the highest rate in four decades.
It’s certainly not a number that Fed officials are going to be happy with and will merely serve to reinforce Powell’s message that the Fed will keep at it on raising rates until there is clear evidence that inflation is on a sustainable downward path.
A 100bps move would send completely the wrong message, implying a knee-jerk response on the basis of a single month, and potentially spook the market even more than we saw yesterday.
The Agenda
8am BST: European Commission president Ursula von der Leyen speech
9am BST: International Energy Agency oil market report
10am BST: Industrial production for July
1.30pm BST: US producer prices for August
