British inflation held steady at 3.8 percent in August, official data showed Wednesday, reinforcing expectations that the Bank of England (BoE) will keep interest rates unchanged at its meeting this week.
The figure matched July’s reading, according to the Office for National Statistics (ONS).
The BoE cut borrowing costs to four percent in August, the lowest level in two and a half years, but economists widely anticipate that the central bank will maintain the key rate through the remainder of 2025.
The UK economy has faced headwinds in recent months. July’s GDP growth stagnated, while unemployment remained at a four-year high of 4.7 percent. Officials acknowledged ongoing challenges in boosting economic growth ahead of the government’s annual budget announcement in late November.
ONS data showed mixed price movements last month, with airfares declining after a sharp increase in July, while petrol, diesel, and food prices continued to rise. BoE officials expect inflation to peak at four percent in September, double the central bank’s two-percent target.
“Today’s figures underline the higher-for-longer interest rate environment,” said Lindsay James, investment strategist at Quilter, adding that households and businesses will continue to face pressure from elevated costs and constrained demand.
Finance Minister Rachel Reeves noted the economic difficulties faced by families and reiterated the government’s commitment to maintaining tight control over public spending. Meanwhile, several US tech giants, including Microsoft and Google, announced new investments in the UK as President Donald Trump visited the country this week.