Inflation unchanged at 2.2%

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The headline inflation rate remained unchanged in August, teetering just above the Bank of England’s target of 2%. It is important to remember that cooling inflation doesn’t mean prices are falling; it just means that, on average, prices are rising less quickly. But, with wage growth outstripping the pace of inflation for more than a year now, purchasing power is gradually being restored.

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“However, many households are unlikely to feel any richer because high mortgage rates and high rent prices have had a significant impact on budgets. Looking ahead, any relief from lower inflation threatens to be overshadowed by the 10% increase in the Ofgem energy price cap from October, adding £149 a year to an average bill. The loss of the Winter Fuel Payments will exacerbate matters for many pensioners.

“The fact that core inflation, which strips out volatile food and energy prices, remains elevated, ticking higher in August, probably shores up the argument that Bank of England policymakers are likely to hold interest rates tomorrow, as it awaits a major economic puzzle piece to justify a further reduction to the base rate.

“As ever, when it comes to inflation, it is important to remember that we all have a personal inflation number that is unique to each individual. That’s because we don’t all buy the same goods and services. As such, your inflation rate might end up being lower, or higher, than the headline figure.”