“The rate of inflation has now more than halved since its peak last September, bringing welcome relief to the budgets of families and businesses,” a finance ministry spokesman said.
However, inflation remains above the Bank of England’s 2% target. Furthermore, hefty price increases were announced recently by four of Britain’s six largest energy suppliers but have yet to kick in. Last month’s reading was lower due largely to a sharp rise in gas and electricity prices that drove inflation to a peak of 5.2% in September 2011.
Separately, the ONS said factory gate inflation rose to 2.5%, which was higher than analyst forecasts of 2.2%. Input prices declined 1.2%, as the price of oil and imported metals fell. And house prices grew 1.8% on the year in August, which was down from a 2% increase in July.