Bank of England Interest Rate Decision in Focus as UK Inflation Hits 3.1%
UK inflation has risen to 3.1% in August, its highest level this year, according to data released by the Office for National Statistics on Wednesday.
The Consumer Prices Index (CPI) increase is attributed to higher crude oil and petrol prices, which have raised costs of raw materials and goods leaving factories, as well as increased airfares, particularly for long-haul routes, said Grant Fitzner, chief economist at the ONS.
The latest reading comes as energy prices continue to put pressure on household and business costs. The House of Commons Library had anticipated that inflation would be moving towards the Bank of England's 2% target in 2026 before the conflict in the Middle East caused further pressure on energy prices.
Market analysts expect the Bank of England to leave interest rates unchanged on Thursday, although higher-than-expected inflation reading could increase attention on the possibility of a future rate increase. Sanjay Raja, chief UK economist at Deutsche Bank, said that 'higher energy prices are here to stay for longer than expected.'