UK inflation unchanged at 2.2%, above Bank of England's target

UK inflation has remained unchanged at 2.2% in August, the Office for National Statistics said, just above the Bank of England’s 2% target.

Despite staying steady for the second month in a row, price pressures picked up pace in the key services sector as air fares jumped higher.

Inflation rose for the first time this year in July.

The ONS said services sector inflation jumped to 5.6% in August from 5.2% in July as air fares rose across European routes.

This offset falls in prices at petrol pumps.

The figures come ahead of the Bank of England’s next interest rate decision on Thursday.

Grant Fitzner, chief economist at the Office for National Statistics, said: “Inflation held steady in August as various price fluctuations offset each other.

“The main movements came from air fares, in particular to European destinations, which showed a large monthly rise, following a fall this time last year.

“This was offset by lower prices at the pump as well as falling costs at restaurants and hotels.

“Also, the prices of shop-bought alcohol fell slightly this month, but rose at the same time last year.

“Following two months of growth, raw material prices fell, driven by lower crude oil prices, while the increase in the cost of goods leaving factories slowed again.”

While inflation in the sector is volatile, it has been stubbornly high and has been watched closely by Bank policymakers.

The Bank itself has forecast that service inflation is set to pick up this autumn before falling back again by the year-end.

The figures are unlikely to persuade policymakers to vote for another rate cut this month after last month’s reduction to 5% from 5.25%.

Darren Jones, Chief Secretary to the Treasury, said: “Years of sky-high inflation have taken their toll; and prices are still much higher than four years ago.

“So, while more manageable inflation is welcome, we know that millions of families across Britain are struggling, which is why we are determined to fix the foundations of our economy so we can rebuild Britain and make every part of the country better-off.”