UK inflation unexpectedly fell in August, with falling hotel and air fare costs along with a slowdown in food price rises helping to offset a rise in fuel prices, according to official figures.

The Office for National Statistics (ONS) said that Consumer Prices Index (CPI) was 6.7% in August 2023, down from 6.8% in July, and down from a recent peak of 11.1% in October 2022. The rate in August 2023 was the lowest since February 2022.

Mike Randall, CEO of Simply Asset Finance commented: "A third consecutive drop in inflation gives UK business leaders a moment of respite as the consistent pressures on their finances over the past years start to ease slightly. And while headline inflation is still high by the Bank of England's standard, this downward trajectory could still see inflation reach its 5% target by the end of the year. Positive news considering the peaks of 11% inflation experienced in October last year.

“All eyes will be on the Bank of England's interest rate decision tomorrow, but with a lower inflationary environment, it will be encouraging to see businesses be able to plan ahead more confidently. SMEs can start readjusting their prices to carry a competitive advantage, and seek opportunities to grow. However, it is imperative that their access to financing options do not waver and they’re able to secure the funds to support growth areas of their business. It will be the responsibility of lenders to ensure flexible financing remains consistent and reliable in order to underpin this wave of optimism.”