The main readings are all within estimates, with UK headline inflation seen picking up again in August - jumping above 3% for the first time since March.
Higher energy prices was the biggest contributor, amid an increase in prices for diesel and petrol. For some context, diesel prices rose by 14.2 pence per litre in August 2026, compared with a rise of 0.8 pence per litre in August 2025.
Meanwhile, the average price of petrol rose by 9.1 pence per litre between July and August 2026, compared with a rise of 0.3 pence per litre between July and August 2025. The average price stood at 161.3 pence per litre in August 2026. This is the highest price recorded since November 2022.
For the BOE, the more important metric is core annual inflation and this was seen holding steady at 2.6% in August - the same as in July. The reading here is reaffirmed by services inflation also keeping unchanged at 3.4% in August.
There was a much smaller upward effect from air fares than anticipated, with that only rising by 6.2% from July to August. Analyst estimates coming into the report varied but most were convinced that the uptick here would be enough to push services inflation to 3.5% in August.
Overall, the report is one which is very much in-line with estimates and without a further push up in services inflation, it doesn't change the inflation picture all too much for the BOE ahead of their decision tomorrow.
The evidence for meaningful second-round effects remains limited. And that will be the narrative that policymakers can stick with in keeping interest rates unchanged for this week. That being said, it will be a tightly contested call among policymakers - whichever way the vote.
This article was written by Justin Low at investinglive.com.
Source: Investing Live - News
