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Inflation Dips to 9.9% in the 12 Months to August from 10.1% in July

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The UK inflation rate has dipped to 9.9% in the 12 months to August, from 10.1% in July, although prices are still continuing to rise at nearly their fastest rate in 40 years.

Falling petrol prices have pushed the UK's inflation rate back below 10% in August in the first easing of upward pressure on the cost of living in almost a year.

Soaring living costs however are still eating into household budgets, with prices rising faster than wages and The Bank of England has said inflation could peak at more than 13% this year.

Despite the better-than-expected figure, the Bank of England is still expected to raise interest rates by 0.5 points when its monetary policy committee meets next week.

New data from the Office for National Statistics (ONS) reveals that petrol prices dropped by more than 14p a litre in August as a fall in global oil prices was finally reflected in cheaper motoring costs.

Food price inflation rose for a 13th successive month, hitting a fresh 14-year high of 13.1% in August, with increases in the cost of dairy products and eggs.

The ONS also said the cost of food and non-alcoholic beverages had risen throughout 2022, and the 1.5% increase between July and August 2022 was the largest between the two months since 1995.

Clothing and footwear prices rose by 1.1% between July and August as summer sales ended, compared with a 0.2% rise last year, pushing up the annual inflation rate from 6.6% to 7.6%.

Last week, new British Prime Minister Liz Truss announced an emergency fiscal package capping annual household energy bills at £2,500 for the next two years.