BoE Set to Hold Fire as UK Inflation Hits 5-Month High

UK inflation rose to a five-month high of 3.1% in August, driven by sharp price increases for petrol and diesel as well as higher airfares, particularly for long-haul journeys.

The annual headline rate was in line with forecasts, but the underlying measures of price growth offered some relief for the Bank of England (BoE), which is expected to keep interest rates on hold today.

Core inflation, which excludes volatile items such as food and fuel, held steady at 2.6% for a fourth consecutive month in August, while services sector inflation remained unchanged at 3.4%.