Britain's annual inflation accelerated further in August as motor fuel prices continued to rise, according to data from the Office for National Statistics released Wednesday.
Consumer price growth came in at 3.1% year over year for the month, up from July's 2.9%. The latest figure aligned with analysts' expectations.
ONS Chief Economist Grant Fitzner said the "sharp" rise in petrol and diesel prices raised August inflation, with surging crude oil costs driving up raw material expenses and factory gate prices. Fitzner added that increased long-haul airfare also fueled the increase.
August inflation was driven primarily by transport prices, where annual growth climbed to 4.6% from 3.6% in July. This uptick was led by motor fuel prices, which surged 23% on an annual basis, compared with a 15.5% increase in the previous month.
Excluding energy, food, alcohol and tobacco, the annual inflation rate remained at 2.6%, consistent with the consensus estimate.
Ahead of the Bank of England's rate decision on Thursday, ING noted that the latest print does not justify raising interest rates above the current 3.75%.
"None of this is to say the Bank of England won't hike rates this year. If it does raise rates in November, it won't be because of the inflation data today - or any other data for that matter. It'll be because energy prices have stayed high for a number of weeks, at which point the Bank's models are telling them there's a good chance headline inflation exceeds 4%. When that happens, the Bank has previously cited research showing that second-round effects become more likely," ING said.
