UK inflation unexpectedly falls, raising questions about Bank of England rates plan

The BoE said last month that it expected inflation in August would rise to 7.1% before falling sharply to around 5% in October which would still be more than double its 2% target.

As well as providing some relief to the Bank of England, which has come under criticism after inflation surpassed 11% last October, the latest figures were welcomed by the British prime minister Rishi Sunak.

Britain's high inflation rate unexpectedly fell in August, prompting investors to increase their bets on the Bank of England (BoE) pausing its historic run of interest rates hikes as soon as Thursday.

Official data published on Wednesday showed the consumer price index dropped to 6.7%, its lowest since February 2022, from July's 6.8%, confounding forecasts by economists polled by Reuters - and the BoE - for an increase.