British inflation was unchanged in August, official data showed on Wednesday, fuelling expectations that the Bank of England will not cut interest rates again at its meeting this week.
The Consumer Prices Index stood at 3.8 percent last month, the same level as in July, the Office for National Statistics (ONS) said in a statement.
The figure was in line with analysts’ forecasts.
The BoE trimmed borrowing costs in August to four percent, its lowest level in 2.5 years, but is widely expected to maintain its key interest rate on Thursday and for the remainder of 2025.
The Labour government faced a fresh blow last week as data showed the economy stagnated in July, which came at the end of a turbulent week politically for Prime Minister Keir Starmer.
Official data on Tuesday brought more bad news, showing UK unemployment remaining at a four-year high of 4.7 percent.
While the July GDP figure was in line with market expectations, the government acknowledged difficulty in driving economic growth ahead of its annual budget announcement in late November.
The BoE expects inflation to peak at four percent in September, twice its two-percent target.
“Today’s figures underline the higher-for-longer interest rate environment,” said Lindsay James, investment strategist at wealth management firm Quilter.
“That will keep pressure on households already contending with elevated living costs and on businesses facing squeezed demand,” she added.
The ONS noted that airfares declined in August after a sharp increase the previous month, while there was a rise in petrol and diesel prices, as well as another uptick in food prices.
“I know families are finding it tough and that for many the economy feels stuck,” said finance minister Rachel Reeves, who has promised to keep a “tight grip” on public spending.
Britain’s economy has struggled to grow after Reeves hiked taxes and slashed public spending following Labour’s general election win in July last year.
Several US tech giants, including Microsoft and Google, this week unveiled investments in the UK as President Donald Trump arrived for a state visit to the country.
