ONS: Inflation drops in August

The CPI 12-month inflation rate in August was 1.7% - the lowest level since December 2016. It has dropped from 2.1% in July.

The largest downward contributions to the change between July and August came from a range of recreational and cultural goods and services (principally games, toys and hobbies, and cultural services), clothing and sea fares.

Hayley Millhouse, head of advisory services at OpenMoney said:

“Not only is inflation the dog that hasn’t barked, it now looks as if it’s merely whimpering. Despite the unprecedented fall in the value of sterling since the vote to leave the EU, which should have led to higher import prices, inflation is still remarkably subdued, and is now falling again.

“While this is good news for savers, all eyes are now on next month, when CPI will determine by how much index-linked benefits such as state (and local government) pensions will rise next year.”