Official data due at 7am BST is expected to show that UK inflation rose in August, according to The Guardian’s rolling business coverage. Economists forecast that the Consumer Prices Index increased by about 3.1% over the year, compared with 2.9% in the 12 months to July.
The anticipated rise would take inflation further above the Bank of England’s 2% target. The coverage says higher fuel costs are expected to have added to household pressures, after oil prices increased since the conflict referred to in the report began.
Petrol and diesel prices have reached their highest levels since that conflict began, according to the supplied material. It says filling up is now more expensive than at any point since 2022, potentially intensifying the squeeze on household budgets.
Pantheon Macroeconomics has identified another possible source of price pressure. Rob Wood, the firm’s UK economist, said Pantheon believes higher electronics prices, linked to chip shortages amid the artificial-intelligence boom, could add 0.2 percentage points to inflation. The firm describes this potential effect as “AI-flation”.
A stronger inflation figure could also affect financial markets and government borrowing costs. The Guardian reports that UK borrowing costs reached their highest level since 2007 on the previous day as a bond-market sell-off continued. The average 10-year bond yield across the G7 also reached its highest level since mid-2008, according to the coverage.
The UK is not the only major economy facing above-target inflation. US inflation was reported at 3.4% the previous week, a figure the report says could encourage the Federal Reserve to raise interest rates. The US central bank was due to announce its decision and hold a press conference later in the day.