UK August Inflation Jumps to 3.1%, Highest in Five Months, but Core Holds Steady
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The Office for National Statistics said UK inflation accelerated to 3.1% in August, the highest in five months and in line with economists' expectations, driven by surging energy prices amid renewed conflict in the Persian Gulf. However, core inflation, which excludes food and fuel, held steady at 2.6% for a fourth consecutive month, while services inflation, closely watched by the Bank of England, remained at 3.4%. Factory gate prices rose 3.7% year on year, above all analyst forecasts, after July's figure was revised up to 3.3%, and input prices jumped 6.1% year on year, following an upward revision to 5.8% for July. Market investors see roughly a 20% chance that the Bank of England will raise interest rates by 0.25% at its meeting this Thursday, but the odds have climbed to 75% that the Bank of England will raise rates twice before the end of 2026.
