UK Inflation Rate Unexpectedly Dips to 9.9%

The UK’s Inflation rate fell in August due to decreasing gasoline costs, but food prices rose as the country’s cost-of-living crisis persisted. The consumer price index climbed by 9.9% annually, according to the Office for National Statistics data on Wednesday. This is somewhat less than the consensus expectation of 10.2% among economists surveyed by Reuters. It was also less than July’s 10.1% number.

The 0.5% month-over-month increase in consumer prices was slightly less than anticipated. As expected, core Inflation, which excludes volatile commodities like energy, food, alcohol, and tobacco, rose by 0.8% from one month to the next and 6.3% from one year ago. According to the ONS, during July and August 2022, the price of motor fuels decreased the most, which hurt both the CPIH and CPI annual Inflation rates.

Food price increases represented the biggest, largely offsetting the upward impact of the change in rates. On Wednesday morning, the pound’s value relative to the dollar was nearly flat, hovering at about $1.1490. This year, the U.K. has experienced one of the biggest decreases in real earnings on record due to skyrocketing food and energy costs and pay increases that have not kept up with Inflation.

The emergency fiscal package, which was unveiled last week by the new British Prime Minister Liz Truss, will cap annual household energy costs at £2,500 ($2,881.90) for the next two years while also providing businesses with an equivalent guarantee for the following six months and additional support for vulnerably affected industries.