UK inflation posts surprise fall to 6.7%

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UK inflation was lower than expected in August, falling to 6.7 per cent from 6.8 per cent in July, rather than increasing on the back of higher petrol costs.

The drop in almost all measures of inflation surprised economists and will put pressure on the Bank of England to stop raising interest rates and keep them at 5.25 per cent on Thursday.

Core inflation — excluding food, alcohol and energy prices — dropped from 6.9 per cent in July to 6.2 per cent in August, while the costs of services were up 6.8 per cent in August compared with a year earlier, a lower inflation rate than 7.4 per cent in July.

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