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UK inflation unexpectedly held steady at 3.8 per cent in September, in a boost to the Bank of England as it weighs when to cut interest rates again.
Wednesday’s figure from the Office for National Statistics was below the 4 per cent expected by the BoE and economists polled by Reuters. It was unchanged from August’s reading.
September’s figure was held back by lower prices for food and non-alcoholic beverages, as well in the leisure sector, including for live music, the ONS said.
The data comes as the BoE’s Monetary Policy Committee attempts to bring inflation back towards its 2 per cent target without choking off economic growth. The MPC has for months contended with still-high inflation and sluggish economic growth.
The economy grew 0.3 per cent in the three months to August, official figures last week showed, unchanged from the second quarter but down from 0.7 per cent in the first quarter.
Services inflation, which is closely watched by the BoE’s rate-setters as a measure of underlying price pressures in the economy, held steady at 4.7 per cent in September, below the 5 per cent rate predicted by the BoE.
Following the release of the figures, the pound erased earlier gains to trade down 0.2 per cent against the dollar at $1.335
September’s figures come as chancellor Rachel Reeves vows to take measures in November’s Budget to curb inflation in an attempt to clear the way for further rate cuts from the BoE.
Responding to the data, Reeves said she was “not satisfied with these numbers”, adding that “for too long, our economy has felt stuck, with people feeling like they are putting in more and getting less out”.
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