Live: Inflation expected to rise
Thank you for following our live coverage of tomorrow’s inflation data release.
We will close our live report for now, but join us tomorrow at 7am when we will be reporting on August’s inflation release live.
What is your personal inflation rate?
Inflation affects different people to different extents. While the headline rate of inflation was 2.9% in July, not every good or service will have become 2.9% more expensive in the last 12 months.
The price of some goods may have risen faster than this, while other goods may have become cheaper.
To get a good idea of how inflation is affecting your finances, you can calculate your personal inflation rate.
To do this, you should look at what you are spending your money on and then create a basket of goods you buy regularly.
Once you have this basket, you should note down how much it costs every month.
If you compare this to your spending in the same month a year ago (and your spending habits were roughly the same), the difference between the two figures will give you a rough idea of how much prices have gone up or down.
Why higher inflation is a challenge for savers
High inflation means the value of your money erodes over time.
The best way to combat this is by growing your money at a rate higher than inflation, but when inflation is above target, this is becomes more difficult.
Harriet Guevara, chief savings officer at Nottingham Building Society, said: “For savers, the challenge is that higher inflation erodes the real value of their cash, and knowing when to stick or twist on looking for a better savings deal becomes tricker given the prospects of interest rates also rising in the near future.
“It is therefore worth households looking at what their savings pots are there to do for them. Accessibility should be the priority for any money stored in case it’s needed at short notice, while for longer-term savings the rate of return will be a priority consideration. Savers should also consider the tax implications of interest earned outside tax-efficient accounts.”
She added: “Whatever tomorrow’s figure, it is a good prompt to review where your money is held, what it is earning and whether it still fits your needs.”
Where could interest rates go after August’s inflation data?
Experts think that although August’s data will likely show a rise in inflation, interest rates will probably stay held at 3.75% on Thursday.
The Bank has so far adopted a “wait-and-see” approach to rising inflation, waiting for as much data as possible before moving interest rates.
Economists at Deutsche Bank and Oxford Economics think the Bank will continue this approach for at least the next meeting, though the chances of a rate hike are becoming higher.
While rates have been held at five consecutive MPC meetings, there is growing pressure from within the committee to raise interest rates, with three members, including the Bank’s chief economist Huw Pill, voting to hike rates in July.
Sanjay Raja, chief UK economist at Deutsche Bank, said: “We don’t expect any change to Bank Rate, with the MPC likely to remain on the sidelines relative to other central banks. But we do think the tides are turning on the inflation backdrop.
“Higher energy prices are here to stay for longer than expected. Inflation is no longer missing to the downside as it did throughout Q2-26. The economy has been far more resilient than the BoE envisaged. The labour market is showing some signs of stabilisation. And risks around wage settlements remain skewed to the upside.”
He added that this is weakening the case for keeping rates on hold.
The Bank of England to announce latest interest rates decision on 17 September
Tomorrow’s inflation data will be closely watched by the Bank of England’s Monetary Policy Committee (MPC), who meet every six weeks to decide whether to cut, hold, or raise interest rates.
The central bank has a mandate to keep inflation at 2%, and their main way of achieving this is through changing interest rates.
Broadly speaking, when inflation is too high they will raise interest rates, and when inflation is too low they will lower interest rates.
MoneyWeek will be reporting on the latest MPC meeting, with our live report starting tomorrow afternoon.
Where has inflation gone recently?
At the start of the year, most economists expected inflation to return to the 2% target in 2026, but the Iran war meant forecasts had to be revised.
Following a few months of easing inflation in the first half of 2026, price growth started to rise again in July, and forecasters expect this to keep rising for the remainder of the year.
Where did inflation go last month?
Inflation rose to 2.9% in the year to July, up from 2.6% in the year to June, according to the ONS. The rise was widely predicted by economists who forecast prices to increase over the remainder of 2026.
July’s inflation figure was driven by surging gas, energy, furniture, household goods, clothing, and footwear prices.
The overall increase was partially offset by a fall in transport inflation and the lowest level of food and non-alcoholic drink inflation since 2021.
What you should expect from August’s inflation data
Tomorrow’s inflation data is likely to show that price growth increased again in the 12 months to August, possibly rising to above 3% as the UK dealt with high fuel and energy prices.
Almost all economists agree that inflation will keep rising for the rest of 2026, as the economic consequences of the Iran war continue to affect the UK.
In particular, rising oil prices have resulted in higher energy and fuel costs. Petrol prices are at their highest level since the conflict began on 28 February, reaching an average of over 169p a litre on 15 September (over 191p a litre for diesel).
Meanwhile, the energy regulator, Ofgem, confirmed energy costs will increase by 4% from October when the latest energy price cap comes into force.
Higher energy and fuel prices are expected to push up the headline rate of inflation in August and beyond, causing it to remain above the Bank of England’s 2% target.
What is inflation?
Inflation is one of the most important economic metrics and allows consumers and the government alike to see how the cost of living is changing.
In simple terms, inflation measures how much the price of goods and services have risen over a set period of time, usually 12 months.
For example, if a leg of lamb cost £10 one year but rose to £11 the next year, we can say the price of a leg of lamb inflated by 10%.
There are multiple ways of measuring inflation, but the main one is the consumer prices index (CPI).
The UK’s target level of inflation is 2%, which economists say is a healthy level of price growth in the economy that stimulates spending and economic growth.
When will August’s inflation data be released?
August’s inflation data will be released at 7am, 16 September.
It will be published by the Office for National Statistics (ONS), the UK’s official statistics provider, and will include the latest readings for the consumer prices index (CPI), retail prices index (RPI), and the consumer prices index including owner occupiers’ housing costs (CPIH).
Inflation data is released by the ONS every month, covering where prices went in the last full month.
