Inflation in the UK held steady in August, with CPI unchanged at 3.8% yoy, matching consensus. On the month, prices rose 0.3%. Core CPI, which strips out food, energy, alcohol, and tobacco, eased from 3.8% yoy to 3.6% yoy, a notch below expectations of 3.7% yoy and another sign that underlying pressures are easing gradually.
Goods prices provided an offset, rising from 2.7% yoy to 2.8% yoy, their highest since October 2023. By contrast, services inflation slowed from 5.0% to 4.7%, pointing to softer domestic price dynamics. While still elevated, the services pullback is significant given its importance in shaping medium-term inflation risks.
The BoE meets tomorrow and is expected to hold rates steady, but the August CPI figures will feed into the debate over November’s decision. Softer core and services readings suggest disinflationary progress is intact, leaving policymakers room to consider another rate cut if incoming data on growth and jobs reinforce the trend.
