Market News

The rate of inflation was stuck at a 19-month high during August, official figures showed, as economists warned that surging prices had become “entrenched”.

The consumer prices index (CPI) rose by 3.8pc last month, according to the Office for National Statistics (ONS), which remained at the highest level since January 2024.

The figure is still well above the Bank of England’s 2pc target and cemented market expectations that policymakers will not be able to cut interest rates again this year.

Rises in food and drink prices accelerated for the fifth month in a row to 5.1pc in August, driven by items like vegetables, milk, eggs, cheese and fish.

Niesr associate economist Monica George Michail said the figures “confirm inflation remains entrenched,” while Paul Dales of Capital Economics called the data “troubling”.

Persistent inflation maintains pressure on the Chancellor because the cost of borrowing for the Government is linked to the rate of inflation through many sovereign bonds.

Ms Reeves said: “I know families are finding it tough and that for many the economy feels stuck. That’s why I’m determined to bring costs down and support people who are facing higher bills.”

It comes as economists believe the Chancellor will have to raise taxes by at least £20bn in her Budget on Nov 26 to balance the public finances.

Officials suggested that Labour would attempt to pin Britain’s dire growth performance since the financial crisis on the Tories.

Shadow chancellor Sir Mel Stride said the Government was failing to control inflation.

He said: “Labour’s decision to tax jobs and ramp up borrowing is pushing up costs and stoking inflation – making everyday essentials more expensive.”