Britain’s inflation rate remained unchanged in August, official figures revealed on Wednesday, strengthening expectations that the Bank of England will keep interest rates on hold this week.
The Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI) stood at 3.8 per cent in August, the same as July and in line with analysts’ forecasts.
The Bank of England reduced borrowing costs in August to 4 per cent — the lowest in two and a half years — but is widely expected to maintain that rate on Thursday and for the rest of 2025.
The Labour government suffered another setback last week when data showed the economy stagnated in July, capping a politically turbulent spell for Prime Minister Keir Starmer. On Tuesday, further figures showed unemployment holding at a four-year high of 4.7 per cent.
Although the July GDP result matched forecasts, ministers conceded that boosting growth remains difficult ahead of November’s annual budget. The Bank of England predicts inflation will peak at 4 per cent in September, double its two per cent target.
“Today’s figures underline the higher-for-longer interest rate environment,” said Lindsay James, investment strategist at Quilter. “That will keep pressure on households already grappling with high living costs and on businesses facing weaker demand.”
The ONS noted that airfares fell in August after a sharp rise in July, while fuel and food prices climbed further.
Finance Minister Rachel Reeves acknowledged the strain: “I know families are finding it tough and that for many the economy feels stuck.” She pledged to maintain a “tight grip” on public spending.
Growth has remained sluggish since Reeves raised taxes and cut public expenditure following Labour’s election victory last year.
Meanwhile, several US tech firms, including Microsoft and Google, announced new investments in the UK as President Donald Trump began a state visit.