UK Inflation Drops Unexpectedly in August

UK inflation for August recorded a decrease to 6.7%, down from July's 6.8%. This came despite predictions of a potential rise influenced by petrol prices.

The notable decline across several inflation indicators caught the attention of economists. It now raises questions about the Bank of England's strategy, with many suggesting it might hold interest rates at the current 5.25% in its upcoming Thursday meeting.

Core inflation, when setting aside factors like food, alcohol, and energy, moved from 6.9% in July to 6.2% in August. On the other hand, year-on-year service costs increased by 6.8% in August, a reduction from July’s 7.4%.

Given the data, there's a growing sentiment that the Bank of England might pause further rate hikes, potentially stabilizing mortgage costs and positively impacting the sales market liquidity.

Persimmon and Taylor Wimpey both registered gains of more than 6% in early trading. Berkeley, Vistry, Crest Nicholson, Barratt, Redrow and Bellway also jumped at least 4%.