UK inflation holds at 0.6% in August

UK inflation stayed at 0.6% in August despite the weak GBP. The value is below expectations for 0.7% growth in as measured by the Consumer Prices Index (CPI) on an annual basis. The rising food prices and air fares pushed prices higher, but the effect was partly offset by cheaper prices for hotel rooms. The inflation level is still relatively low, compared to historical standards, although the value is above the levels in 2015 and early 2016.

The main contribution to the growth of consumer prices of food and airfares. Moreover, the decline in the prices of transport fuels is less than last year. This pressure upward is offset by the decline in the prices of hotel services. Weaknesses were increases in the prices of alcohol, clothing and footwear.

On other side, the Retail Prices Index (RPI) measure of inflation, which includes mortgage interest payments, dropped to 1.8% in August. Separate figures from the ONS suggest inflationary pressures are building for businesses bringing in materials from abroad.

The materials and fuels bought by UK manufacturers rose by 7.6% in price. That was the fastest rise since December 2011, and compared with a rise of 4.1% in the year to July. The price of goods leaving the factory also rose 0.8%, compared with a rise of 0.3% the previous month.

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