Business Today: UK inflation eases to 9.9% but remains close to 40-year high

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UK inflation eases to 9.9% but remains close to 40-year high
Live / UK inflation eases to 9.9% but remains close to 40-year high
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
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Today's agenda
Inflation in the UK eased slightly in August, falling to an annual rate of 9.9% from 10.1% in July, but remains close to the highest rate in 40 years.

Inflation eased because of a monthly fall in petrol and diesel prices, while food and clothing became more expensive. Economists had expected a further small rise to 10.2% in the headline rate.

Prices rose by 0.5% in August from July, according to the Office for National Statistics. It said: "Food and non-alcoholic beverages made the largest upward contribution to the monthly rates in August 2022, while falling prices for motor fuels resulted in a large offsetting downward contribution."

Bringing some relief for drivers, the annual rate for motor fuels eased from 43.7% to 32.1% between July and August. This is mainly a result of petrol prices falling by 14.3p a litre between these months, compared with a 2p rise a year ago. Diesel prices also contributed to the change in the rate, falling by 11.3p a litre this year.

However, food and non-alcoholic drinks prices rose at an annual rate of 13.1% in August, up from 12.7% in July, marking the highest rate since August 2008. The largest upward effect came from milk, cheese and eggs.

"Miscellaneous goods and services" such as hairdressing, toiletries and cosmetics, jewellery, insurance, and financial services recorded a 4.6% rate, up from 4% in July and the highest since September 2005. The biggest price rises came from appliances and products for personal care.

Clothing and footwear prices rose by 7.6% in the year to August, up from 6.6% in July. Prices normally rise at this time of year as the autumn ranges enter the shops after the summer sales season, although the Covid pandemic affected the usual pattern in the last two years.

The increase was mainly driven by men's and women's clothing, where prices rose between July and August but fell between the same two months a year ago.

September's consumer prices index (out in mid-October) is important because it will be used by the government as the basis for increases to benefits and pensions next April.

European shares are falling again. The UK's FTSE 100 index has lost almost 40 points, or 0.5%, to 7,347 just after the opening bell. Germany's Dax and France's Cac are down 0.5%, while Spain's Ibex is flat and Italy's FTSE MiB has edged 0.2% lower.


The agenda
• 
8am BST: speech by European Commission president, Ursula von der Leyen 
• 9am BST: International Energy Agency oil market report
• 10am BST: Industrial production for July
• 1.30pm BST: US producer prices for August

We'll be tracking all the main events throughout the day ...
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