UK inflation unexpectedly fell by a tenth of a point to 6.7 per cent in August

The annual rate of consumer price inflation in Britain slowed unexpectedly in August, with the inflation rate easing by a tenth of a point to 6.7 percent.

Surprising results

Economists in a Reuters poll had expected inflation to rise to seven percent. They justified this by a significant rise in fuel prices and an increase in the tax on alcoholic beverages.

The surprising fall in the inflation rate sharply depressed the pound against the US dollar and the euro. Investors are not so sure that the central bank will raise the base rate again on Thursday. Some economists now believe not.

The strength of the tourism industry

The statistics office said lower airfares and hotel prices were behind the easing of inflation. Food prices then rose less than in the same period last year.

The central bank estimated in August that the inflation rate for August would rise to 7.1 percent and then fall sharply in October to around five percent. Even so, it would still be more than double the central bank’s two percent inflation target.

Source Czech Press Office

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