UK inflation eases to 9.9% but remains close to 40-year high – business live

Inflation eases because of a fall in petrol and diesel prices while food prices rise at fastest rate since mid-2008, driven by milk, cheese and eggs

The unexpected slowdown in UK inflation eases the pressure on the Bank of England and means it doesn’t need the “strangle the economy” by raising interest rates all the way to 4%, as markets anticipate, one economist says.

“In one line: Sustaining, rather than increasing, the pressure on the monetary policy committee (MPC) to act,” says Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

The headline rate of CPI inflation fell in August for the first time since last September and now looks set to drop sharply next year, thanks partly to the government’s energy price cap.

A sharp decline in motor fuel CPI inflation to 32.1% in August, from 43.7% in July, was the primary driver of the decline in the headline rate. This dominated a further rise in food CPI inflation to 13.1%, from 12.6%, which was linked to past sharp increases in producer and import prices.

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