Inflation falls slightly to 6.7%

The current rate of inflation dropped marginally to 6.7% in August, down from 6.8% in July, with food and hotel prices falling.

Core inflation, stripping out energy, food and alcohol, also fell from 6.9% in July to 6.2%, revealed figures from the Office for National Statistics (ONS).

Food and non-alcoholic beverage prices rose by 0.3% between July and August 2023, compared with a rise of 1.5% in the same period a year ago.

This resulted in an easing in the annual rate of food inflation to 13.6% in August, down from 14.9% in July, and a marked fall from the 19.2% recorded in March – which was the highest annual rate for over 45 years.

Milk, cheese, eggs, vegetables and fish prices fell the most, with the annual rate for these products falling back to 15.3%, down from 18.7% in July.

Grant Fitzner, ONS chief economist, said: ‘The rate of inflation eased slightly this month driven by falls in the often erratic cost of overnight accommodation and airfares, as well as food prices rising by less than the same time last year.

‘This was partially offset by an increase in the price of petrol and diesel compared with a steep decline at this time last year, following record prices seen in July 2022. Core inflation has slowed this month by more than the headline rate, driven by lower services prices.’

In addition, the easing in the rate reflected a fall in the cost of overnight hotel accommodation.

The annual rate for transport saw an upward trend, where prices rose by 0.2% between July and August 2023, compared with a fall of 1.2% last year.

Overall, petrol and diesel prices stood at 148.5 and 151.1 pence per litre respectively, compared with 175.2 and 186.6 pence per litre in August 2022.

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: ‘Relief has surged as inflation fell, defying predictions of a small bump, as lower food inflation helped us digest rises in petrol prices.

‘It’s also likely to make tomorrow’s news from the Bank of England slightly sweeter, which in turn could make anyone facing a remortgage in the near future feel less like they’ve bitten off more than they can chew.

‘But unfortunately, in the vast majority of cases, it’s not that things are getting any cheaper, it’s just that prices are rising more slowly.’

For answers to questions on the cost of living crisis and how it affects employees, visit BrAInbox today where you can find answers to questions like Do I need to cover the ULEZ charge for my employees who drive into Greater London to come to work?

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