UK inflation rose to 3.1% in August from 2.9% in July, the highest reading in five months, according to the ONS. Motor fuel prices made the biggest contribution to the rise, with a 23% year-on-year increase, pushing average petrol prices to 161.3p a litre, the highest since November 2022. Underlying inflation remained steady, however, with core inflation holding at 2.6% and services inflation at 3.4% for a fourth consecutive month. The Bank of England is expected to hold rates at 3.75%, with markets pricing only a one-in-three chance of a quarter-point hike. Several major central banks are tightening simultaneously: the ECB raised its deposit rate to 2.50% on September 10, and the Federal Reserve is expected to announce a quarter-point hike with roughly 87% odds.
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