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UK Inflation Slows In August

UK inflation slowed in August largely driven by subsidies provided for eating out, the Office for National Statistics said Wednesday.

Inflation eased less-than-expected to 0.2 percent in August from 1 percent in July. Prices were forecast to climb 0.1 percent.

Month-on-month, consumer prices dropped 0.4 percent, offsetting a 0.4 percent rise in July. Economists had forecast a 0.6 percent fall.

Falling prices in restaurants and cafes, arising from the Eat Out to Help Out Scheme, resulted in the largest downward contribution to the annual inflation, the ONS reported. Meanwhile, upward contributions came from games, toys and hobbies, accommodation services and road transport services.

Excluding energy, food, alcoholic beverages and tobacco, core inflation halved to 0.9 percent from 1.8 percent. This was also below economists' forecast of 0.6 percent.

Another report from the ONS showed that output prices continued to decline in August. Output prices were down 0.9 percent annually for the third straight month. Prices were expected to fall 0.7 percent.

Compared to July, output prices remained flat, while economists' had forecast prices to grow 0.2 percent after climbing 0.3 percent in July.

Input price inflation continued to display negative growth for the seventh consecutive month in August. Input prices declined 5.8 percent annually versus a 5.7 percent decrease a month ago.

On a monthly basis, input prices slid at a pace of 0.4 percent, reversing a 1.8 percent rise in July. Economists had forecast a monthly growth of 0.3 percent. This was the first fall in four months.

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