Overview

• Official ONS data show annual CPI unchanged at 3.8% in August, with core inflation easing to 3.6% as lower airfares were offset by pricier fuel and hotel stays.
• Food and non-alcoholic drink inflation accelerated to 5.1% from 4.9% in July, the fifth consecutive monthly rise, with increases across vegetables, dairy, fish and meats.
• Labour market indicators point to cooling conditions, with unemployment at 4.7% in the three months to July and regular pay growth slowing to 4.8%; total pay rose 4.7%, a figure likely to guide next April’s state pension under the triple lock.
• After cutting rates to 4% in August, the Bank of England is widely expected to pause further easing on Thursday, with many economists doubtful of additional cuts this year.
• Analysts and industry groups warn that sticky inflation and higher employment and regulatory costs are squeezing households and firms, and sterling edged lower following the inflation release.