UK inflation rate falls to 2.7% in August

Photograph courtesy of 401 Calculator

The Consumer Price Index (CPI), a measure of the UK’s inflation, fell to 2.7% in the year to August, down from 2.8% in July.

Inflation has been broadly steady since spring 2012 according to the Office of National Statistics [PDF], with the fall a result of a slower rise in the cost of transport, particularly petrol and air travel, and clothing.

At 2.7%, inflation still outstrips the rise in wages, which have risen by 1.0% over the last 12 months.

The Bank of England uses CPI in determining its interest rates, and targets a 2% figure. However, they are currently postponing any raise in interest rates due to the high levels of unemployment.