Inflation stays level at 0.6%

Rising food prices and air fares were offset by falls in hotels, wine and clothing
Rising food prices and air fares were offset by falls in hotels, wine and clothing

Inflation was unchanged at 0.6% last month as rising food and transport prices were offset by a slip in the cost of clothing, wine and hotels.

The Consumer Price Index (CPI) inflation stalled in August after stepping up in June and July by 0.5% and 0.6% respectively, the Office for National Statistics (ONS) said.

Economists had been pencilling in a rise of 0.7%.

The ONS said there was “little sign” of the plunge in the value of the pound to 31-year lows following the Brexit vote being passed through to consumer prices.

However, the Producer Prices Index was impacted by the sterling’s slump, with input prices rising 7.6% in the year to August and imported material prices climbing by 9.3% over the period.

The fall in the value of the pound makes British goods cheaper to export on the global market, but makes imported goods and products more expensive.

The Retail Prices Index (RPI) - a separate measure of inflation, which includes housing costs - fell to 1.8% in August, down from 1.9% in July.

Mike Prestwood, head of inflation at the ONS, said: “Fuel costs falling more slowly than a year ago as well as rising food prices and air fares all pushed up CPI in August, but these were offset by hotels, wine and clothing leaving the headline rate of inflation unchanged.

“Raw materials costs have risen for the second month running, partly due to the falling value of the pound, though there is little sign of this feeding through to consumer prices yet.”

The main upward pressure on CPI came from transport prices, which jumped by 0.9% between July and August, as motor fuels fell by less than they did a year ago.

The price of petrol at the pump dropped by 1.8 pence a litre to 110 pence in August, while the price of diesel also edged down 1.2 pence per litre to 111.8 pence. Diesel prices had fallen by 6.2 pence a litre in August 2015.