UK inflation dips slightly in August to 9.9%

UK Prime Minister Liz Truss last week moved to ease the pain, announcing a cap on household gas and electricity prices to head off an 80 percent increase in home energy costs this winter. Before that announcement, the Bank of England had estimated that inflation would peak at 13.1 percent later this year.

“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,” said Samuel Tombs, chief UK economist for Pantheon Macroeconomics.

Tombs estimates that the inflation rate will now peak around 11 percent next month and may drop to the Bank of England’s 2 percent target by the end of next year.

Gasoline prices fell 7.5 percent to 175.2 pence ($2.01) a litre in August as oil prices dropped on international markets, the ONS said. While the decline brought welcome relief to motorists, the cost of fuel is still 32 percent higher than it was a year ago.

But there was no relief at the grocery store. A jump in the cost of milk, cheese and eggs drove food prices up 13.1 percent in the year through August, the ONS said.

Electricity prices rose 54 percent in the period and natural gas prices rose almost 96 percent.