According to the Office for National Statistics, the Consumer Price Index inflation rate decreased from 10.1 percent in July to 9.9 percent in August.
The unexpected decline is a minor but welcome economic benefit for the new administration.
The ONS stated the primary driver of the reduction was a fall in the price of fuel and diesel.
However, it also included a warning that rising food costs were keeping the rate high.
‘The decrease in the annual inflation rate in August 2022 reflected largely a decline in the price of motor fuels in the transport section of the index,’ the ONS said in today’s inflation statement.
Price increases for food and non-alcoholic drinks, other products and services, apparel, and footwear had smaller, partly offsetting upward impacts.
The yearly rate for motor fuels decreased from 43.7% to 32.1% between July and August 2022, it was further said. This is mostly due to a 14.3 pence per litre decrease in gasoline costs between these months.
“From July to August 2021, gas prices increased by 2.0 cents per litre. Diesel costs, which decreased by 11.3 cents per litre this year compared to a 1.5 penny per litre increase last year, also had a role in the rate adjustment.
Further government action, according to the Institute for Public Policy Research (IPPR) think tank, is required to avoid “more hardship and more misery” brought on by price increases.
Many people, including the Bank of England, which is considering whether to hike interest rates next week, would appreciate the CPI inflation lowering somewhat this month, according to Dr. George Dibb of the center-left think tank.
“However, this headline statistic has been lowered by declining gasoline costs, and it conceals the unsettling fact that the cost of food and clothes continues to rise quickly.
“High inflation equals high prices, and if action is not taken, this will result in increased suffering, poverty, and destitution.”
“The Government’s price ceiling on energy for homes and businesses is a positive start, but it won’t immediately lessen the inflation we already see in basic necessities like food and clothes.”
It comes as the jobless rate yesterday dropped to its lowest level in almost 50 years, despite being fueled by an increase in the number of persons claiming they are unable to work due to illness.
In the three months leading up to July, the number of individuals categorised as long-term unwell reached a record high.
The total unemployment rate decreased to 3.6%, its lowest level since 1974.
The employment rate, however, also decreased and is still below pre-Covid levels.
The fact that numbers also showed earnings falling exposed the ongoing severe pressure on Britons.
Regular salary, excluding incentives, increased by a modest 5.2% in the three months leading up to July, although that was still far below inflation.
When the rising headline CPI rate is taken into account, earnings decreased by 3.6% while total compensation decreased by 3.9%.
The most recent snapshot was published after inflation soared to a new 40-year high of 10.1% in July as energy and food prices rocketed through the roof.
The Government’s decision to cap energy costs at £2,500 is expected to tame the escalating price hikes and may lessen pressure on the Bank of England to raise interest rates.