UK Inflation Holds Steady at 3.8% as Bank of England Decides on Rate 

UK Inflation Holds Steady at 3.8% as Bank of England Decides on Rate

Britain’s inflation rate remained unchanged in August, official figures showed on Wednesday, reinforcing expectations that the Bank of England (BoE) will hold fire on further interest rate cuts at its policy meeting this week.

Data from the Office for National Statistics (ONS) revealed that the Consumer Prices Index (CPI) stood at 3.8% in August, the same level recorded in July.

The figure matched analysts’ forecasts and suggests that inflationary pressures remain steady despite recent shifts in monetary policy.

The BoE lowered its benchmark interest rate in August to 4%, the lowest level in two and a half years, in an effort to support economic growth after a prolonged period of tight monetary policy.

However, economists believe the central bank will adopt a cautious stance when its Monetary Policy Committee (MPC) meets on Thursday.

“While inflation is down sharply from the double-digit levels seen last year, it remains above the Bank’s 2% target.

That makes another cut this week unlikely,” said James Taylor, senior economist at Capital Economics.

The UK economy has faced a delicate balancing act in 2025—managing slowing growth while attempting to bring price pressures under control.

Falling energy costs and easing food price inflation have contributed to the decline from last year’s peaks, but services and wage growth continue to add upward pressure.

Markets now expect the BoE to keep rates steady through the remainder of 2025, with further cuts possible in 2026 if inflation continues to moderate toward target.

The MPC’s decision is scheduled to be announced on Thursday.