UK inflation accelerated to 3.1% in August
In the United Kingdom, annual inflation accelerated to 3.1% in August after 2.9% in July. The consumer price index rose by 3.1% over the 12 months to August, according to data from the UK Office for National Statistics, as reported by Asharq Al-Awsat, citing AFP.
Impact of fuel costs
The rise in inflation matched analysts' expectations. The publication links the acceleration in the indicator to higher fuel prices amid the war in the Middle East.
Higher inflation is increasing pressure on Prime Minister Andy Burnham and Finance Minister John Healey ahead of the Labour government's budget update scheduled for next month. Healey promised to adhere to strict fiscal discipline but did not specify whether the budget for October 28 would include new tax increases.
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Interest rate expectations
The Bank of England is forecast to keep its base interest rate at 3.75% on Thursday, as the British economy struggles with growth. The report also notes that the US Federal Reserve is expected to raise borrowing costs, while the European Central Bank already took a similar step the previous week.
Richard Carter, head of bond research at Quilter Cheviot, said inflation is likely to continue rising at least until the end of the year, as higher energy costs will continue to affect household bills. According to him, the situation in the Middle East remains increasingly tense, and there are few signs of an agreement to end the war.
