THE UK's rate of inflation has fallen again to 6.7% in August, official figures show.
The Consumer Price Index level of inflation decreased from 6.8% in July, according to the Office for National Statistics (ONS).
The CPI, which includes housing costs, rose by 6.3% in the 12 months to August 2023, down from its highest peak of 9.6% in October last year.
Inflation is a measure of how the price of goods and services has changed over the past year.
Grant Fitzner, chief economist for the ONS, said: "The rate of inflation eased slightly this month driven by falls in the often-erratic cost of overnight accommodation and air fares, as well as food prices rising by less than the same time last year.
"This was partially offset by an increase in the price of petrol and diesel compared with a steep decline at this time last year, following record prices seen in July 2022."
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The ONS said the drop was partly down to falls in the costs of things such as hotel stays or flights.
The largest contribution towards the slight decrease came from food, where prices rose by less in August than they did a year ago.
The increase in the prices of petrol led to the largest upward contribution to the change in annual rates.
The average price of petrol rose by 5.3p per litre between July and August, taking it to 148.5p in total.
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Inflation will fall back to 3 per cent next year in boost for families
Chancellor of the Exchequer, Jeremy Hunt said: “Today’s news shows the plan to deal with inflation is working – plain and simple.
"But it is still too high which is why it is all the more important to stick to our plan to halve it so we can ease the pressure on families and businesses. It is also the only path to sustainably higher growth.”
What it means for your money
A drop in inflation usually means that prices are still rising, but at a slower rate.
Michael Clarke, Head of Information Programmes at Turn2us, said: "These figures mean an increase in the real cost of living for people, an increase affecting anyone on a low income most of all.
"Those on the lowest incomes will be unable to afford the basics needed to live and we are now coming into the colder months with no government support for energy in place.
"Intervention is needed to catch people before they fall into crisis because our social security system should provide the protection to weather this continuing crisis.
"The government should ensure that as a minimum, benefit levels are increased to meet the true cost of living and they should assess their own practices of benefit deductions so that money is not taken away from people when they need it most."
High inflation means the cost of everyday essentials, like food and energy are rising, meaning your money doesn't go as far.
The BoE, the UK's central bank, can hike what's known as its base rate to try and bring it down.
While it means people with savings see a boost, it also means interest rates on mortgages rise as well, piling pressure on homeowners.
The Bank of England has been criticised for being wrong with its inflation projections previously.
Adam Bullock, UK Director at TopCashback said: “While better than a rise, we can’t forget that today’s small dip in inflation means that prices are still higher than this time last year.
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“The shift from summer to autumn is one of the costliest times of the year, with colder nights causing a rise in heating bills, people spending money on petrol more often and the cost of Christmas creeping closer.
"Stubbornly high prices come as another blow to the millions across the country who are feeling pressure to keep a tight rein on their spending."
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