UK inflation holds steady at 2.2% in August

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UK inflation held steady at 2.2 per cent in August, leaving the door open for the Bank of England to cut interest rates further this year.

The annual increase in consumer prices, reported by the Office for National Statistics on Wednesday, was unchanged from July’s rate and matched the expectations of economists polled by Reuters. 

Inflation has now been above the BoE’s 2 per cent target for two consecutive months.

The BoE cut rates by a quarter point to 5 per cent in August — the first reduction in more than four years — and signalled it would lower borrowing costs again if inflation eased further.

The Bank’s Monetary Policy Committee will announce its latest rate decision on Thursday.

The inflation figures comes amid mounting signs that the economy is losing momentum. It stagnated in July for a second consecutive month, held back by declines in manufacturing and construction.

The BoE has forecast growth of 0.4 per cent in the three months to September, and 0.2 per cent in the final quarter of the year.

This is a developing story