UK INFLATION RISES TO 3.1% AS PETROL AND AIRFARES CLIMB

UK inflation rose to 3.1% in the year to August, up from 2.9% in July, according to the Office for National Statistics. The ONS said on Wednesday that this was the highest reading in six months, driven largely by rises in petrol, diesel and airfares. Grant Fitzner, the ONS's chief economist, said sharp price rises for petrol and diesel pushed inflation up again in August, and that higher airfares, particularly for long-haul journeys, also contributed. The rise means inflation remains above the Bank of England's 2% target.

The ONS said transport prices rose by 4.6% in the 12 months to August, with motor fuel prices up 23% on a year earlier. Average petrol prices rose by 9.1p per litre between July and August, to 161.3p a litre, the highest level since November 2022, the ONS said. The RAC said separately that average UK forecourt prices reached 170.54p a litre for petrol and 192.86p for diesel on Tuesday, the highest since August 2022 and July 2022 respectively. Oil prices climbed above $91 a barrel amid the continuing conflict involving Israel, the United States and Iran, up from around $73 a barrel before hostilities began earlier this year.

The Bank of England is due to meet on Thursday to decide whether to change its interest rate, currently set at 3.75%, which it uses to try to control inflation. Policymakers will weigh the latest figures, which show inflation moving further from the Bank's 2% target, when making their decision. The ONS said petrol and diesel remained the largest contributors to the rise in transport costs. The conflict in the Middle East has continued to disrupt global oil supplies, the ONS added.