UK Inflation rate holds steady at 2.2% despite rise in air fares

Ms Jenkins is still concerned that higher prices will prompt customers to cut back further on having a second cup of coffee, or going out for lunch.

“I think it’s a painful, painful road ahead,” she said.

But Danni Hewson head of financial analysis at AJ Bell thinks a corner has been turned this year when it comes to prices.

“For the consumer it is an improving picture, especially when it comes to filling up cars or kitchen cupboards,” she said

“August delivered the seventeenth consecutive month of falling food inflation, although many shoppers are still struggling with the cost of everyday essentials – something which is likely to get more acute as the nights draw in and the heating goes on.”

The Bank of England does expect inflation to tick higher again in the second half of this year, with household energy bills rising again in October.

But prices are not forecast to rise as steeply as they did in 2022 and 2023, which prompted the Bank to raise interest rates to 5.25%

The Bank cut interest rates for the first time since the crisis at the start of August, after inflation came down to its target of 2% in May and June, but is expected to hold them on Thursday.

“Today’s data are unlikely to unlock another rate cut by the Bank of England tomorrow,” Yael  Selfin, chief economist at KPMG UK, said.

“While we expect the Bank of England to look beyond the anticipated higher headline inflation, services inflation remains elevated.”

Most economists think the Bank is more likely to cut rates at its next meeting in November.