UK inflation holds at 2.2% in August as BoE considers rates

British inflation stood at an annual rate of 2.2% in August, unchanged from July, but price growth in the services sector - closely watched by the Bank of England - picked up, official figures showed on Wednesday.

A Reuters poll of economists had forecast annual consumer price inflation would remain at 2.2%.

The BoE, which cut interest rates to 5% on Aug. 1, had expected inflation of 2.4% in August before rising to around 2.75% by the end of this year.


The British central bank is due to announce its latest decision on interest rates on Thursday.

"Years of sky-high inflation have taken their toll; and prices are still much higher than four years ago," Darren Jones, a junior minister at the Treasury, said, adding that more manageable inflation was welcome.

Services inflation - an indicator of domestic price pressures - rose to 5.6% from 5.2% in July. The Reuters poll had pointed to a smaller rise to 5.5%.

Sterling strengthened against the dollar immediately after the inflation data was published.