The price of flights has increased while petrol prices have fallen in the UK, according to a report by Wales Online. Latest data from the Office for National Statistics (ONS) revealed that Consumer Prices Index (CPI) inflation has remained above the 2% target for the second consecutive month. The ONS noted that inflation in the services sector rose to 5.6% in August from 5.2% in July due to increased air fares on European routes, which offset the decrease in petrol prices.
Economists expect that the Bank of England will maintain interest rates at 5%, with forecasts indicating that inflation may rise further above the target towards the year-end. Although CPI is below recent forecasts, underlying price pressures in the economy persist. The National Institute of Economic and Social Research (Niesr) suggested that the chances of a rate cut are low, given the anticipated rise in inflation and elevated underlying inflation.
Chief Secretary to the Treasury, Darren Jones, acknowledged the impact of high inflation on families, stating the government’s commitment to stabilising the economy. The ONS data highlighted a significant increase of 22.2% in air fares between July and August, alongside a decrease in the average petrol price from a year ago. Economists believe a rate cut in September is unlikely, with expectations leaning towards a potential cut in November.
The data also revealed that the CPIH inflation measure remained constant at 3.1% in August, while the Retail Prices Index (RPI) decreased to 3.5% from 3.6% in July. The report mentioned a notable increase in price inflation for cinemas, theatres, and concerts, attributed in part to the conclusion of Taylor Swift’s UK tour in August. Overall, the latest inflation figures suggest a stable outlook, with potential considerations for a rate cut later in the year.