Inflation drops to lowest rate in 18 months to 6.7% due to slowdown in food price rises and low air fare costs

The UK's inflation rate had made a surprise drip to its lowest level in 18 months, according to the Office for National Statistics (ONS).

The Consumer Prices Index inflation in August was 6.7%, compared to 6.8% in July. It marks the lowest level of inflation since February 2022.

Financial analysts had predicted a sharp increase in inflation in August owing to a rise in the price of fuel. However, the ONS has said that a decline in the price of hotels and air fares, combined with a slowing of rising food prices has contributed to the unexpected dip.

Grant Fitzner, the ONS’s chief economist, said: “The rate of inflation eased slightly this month driven by falls in the often-erratic cost of overnight accommodation and air fares, as well as food prices rising by less than the same time last year.

“This was partially offset by an increase in the price of petrol and diesel compared with a steep decline at this time last year, following record prices seen in July 2022.

“Core inflation has slowed this month by more than the headline rate, driven by lower services prices.”

Chancellor Jeremy Hunt said: “Today’s news shows the plan to deal with inflation is working – plain and simple. But it is still too high which is why it is all the more important to stick to our plan to halve it so we can ease the pressure on families and businesses.

“It is also the only path to sustainably higher growth.”

However, for shadow chancellor Rachel Reeves and the Labour Party, there is still much to be done to help squash the cost of living crisis in the UK. In response to today's inflation rate announcement, Reeves said: “The UK is forecast to have the highest inflation of any major economy this year.

“The Prime Minister is too weak to turn things around, while his predecessor Liz Truss continues to call for the same policies that crashed the economy this time last year. The Conservatives have wreaked havoc and working people are paying the price.”