Prices in the UK rose less quickly than expected last month. The big question is whether the Bank of England will still raise interest rates on Thursday.
Inflation reached 6.7 percent in August. In October last year, British inflation was still above 11 percent. Since then, the percentage has decreased little by little. Inflation is expected to increase slightly in August due to high fuel prices and an increase in alcohol taxes.
But the surprising decline in inflation, according to the British statistics agency, the Office for National Statistics, occurred because hotel and plane ticket prices became cheaper last month. Food prices also rose more slowly compared to the same period last year.
The Bank of England said last month it expected inflation to rise to 7.1 percent in August. Therefore, many investors expect the state bank to raise interest rates on Thursday. However, due to falling inflation, it remains to be seen what the bank will do.
The Bank of England’s main interest rate is now at 5.25 percent. This is the highest level in more than fifteen years. Since December 2021, the bank has raised this interest rate fourteen times.
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