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Food prices rise at fastest rate since January 2024
Food prices rose for the fifth month in a row to an annual rate of 5.1%, up from 4.9% in July and the highest since January.
Vegetables, milk, cheese and fish became more expensive, while bread and cereals and oil and fats became cheaper.
Air fares rose by less than last year.
Ticket prices were up by 2.1% between July and August, compared with a rise of 22.2% at this time last year. This was due to the different timing of flights in relation to school summer holidays, particularly return flights from Europe. Last year, these return flights from Europe fell during the school term in July, but this year they were during the school holidays in July, making them more expensive this year.
This was offset by higher fuel costs. The average petrol price rose by 0.3p a litre between July and August to 134.2p, compared with a fall of 2.1p a litre last year. Similarly, diesel prices rose by 0.8p per litre to an average of 142.p, against a 2.6p per litre drop last year.
Rachel Reeves, the chancellor, said:
I know families are finding it tough and that for many the economy feels stuck. That’s why I’m determined to bring costs down and support people who are facing higher bills.
Through our Plan for Change we are taking action — raising the National Living Wage, extending the £3 bus fare cap, and expanding free school meals, to put more money in people’s pockets while we work to build a stronger, more stable economy that rewards hard work.
Introduction: UK inflation stayed at 3.8% in July
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK inflation stayed steady last month, keeping households under pressure with petrol prices rising.
The annual rate of inflation, as measured by the consumer prices index, remained at 3.8% last month, the same as in July, according to the Office for National Statistics. This was in line with what economists had predicted.
Air fares rose by less than year while prices at restaurants and hotels, and for petrol and diesel, were higher.
The core rate of inflation, which strips out volatile energy and food costs, fell to 3.6% in July, also as forecast by economists.
With growing inflationary pressures, financial markets are widely predicting the Bank of England will keep interest rates unchanged at 4% on Thursday.
Donald Trump landed at London Stansted last night for an unprecedented second state visit to the UK.
The US president and the first lady, Melania Trump, touched down onboard Air Force One ahead of a series of events over the next two days, including being hosted by King Charles, military parades and a possible flypast by the Red Arrows alongside British and American F-35 jets.
It comes amid criticism in the UK of Trump’s policies and rhetoric, with the Stop Trump Coalition gathering for a protest in Windsor on Tuesday and the group planning another demonstration in central London on Wednesday.
Writing in the Guardian, the London mayor Sadiq Khan accused the US president of doing more than anyone else to “fan the flames of divisive, far-right politics around the world in recent years”.
Later today, the US Federal Reserve announces its latest interest rate decision. It is widely expected to cut rates by a quarter point to 4.25%.
The Agenda
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8.30am BST: ECB president Christine Lagarde speech
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10am BST: Eurozone inflation for August (final)
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1.30pm BST: US Housing starts for August
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2.45pm BST: Bank of Canada interest rate decision
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7pm BST: US Federal Reserve interest rate decision (forecast: quarter-point cut to 4.25%)
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7.30pm BST: Fed press conference
