Inflation remains at 3.8% as food prices continue to rise

UK inflation was unchanged in August, official figures show, maintaining pressure on households as the Bank of England prepares to keep borrowing costs at elevated levels.

- Richard Partington Senior economics correspondent

Figures from the Office for National Statistics (ONS) show the annual rate of inflation as measured by the consumer prices index remained at 3.8% last month, the same level as July and matching the forecasts of City economists.

Financial markets are widely predicting that Bank policymakers will keep interest rates on hold at 4% today at almost twice their official 2% target rate amid signs of sustained inflationary pressures.

After sharp increases in the headline rate in recent months, the ONS said various price movements offset each other in August. The cost of air fares was the main downward driver, while prices rose for petrol and diesel. The cost of hotel accommodation also fell by less than this time last year.