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20/09/2023 16:09

UK inflation rate unexpectedly falls to 6.7% in August

The latest official data, revealed on Wednesday, demonstrated an unexpected decline in the UK's annual Consumer Price Inflation (CPI) to 6.7% in August. This revelation comes just a day prior to the anticipated rate hike by the Bank of England.

In contrast to the predictions of economists surveyed by Reuters, who foresaw a rise to 7.0% from July's 6.8%, various factors such as a surge in fuel prices and an uptick in taxes on alcoholic beverages helped keep the annual inflation rate slightly lower. The Bank of England had earlier estimated that August's inflation would reach 7.1% before subsiding notably to around 5% in October, still significantly above their 2% target.

Anticipated to mark the 15th consecutive increase, the Bank of England is set to elevate interest rates on Thursday, pushing the Bank Rate from 5.25% to 5.5%. However, there's speculation among many economists and investors that this could potentially be the concluding increment in the Bank of England's tightening phase, considering a deceleration in Britain's economy. Core inflation, excluding volatile food and energy prices, declined to 6.2% from July's 6.9%, diverging from the 6.8% figure projected by the Reuters poll for August.

Following the data release by the Office for National Statistics, the British pound experienced a significant drop against both the U.S. dollar and the euro.