UK inflation falls to 2.5%

The UK's main inflation rate fell back towards the 2% target in August, reversing a surprise jump the previous month.

Official data from the Office for National Statistics (ONS) showed the Consumer Prices Index (CPI) inflation rate fell to 2.5% last month, down from 2.6% in July. Meanwhile the Retail Prices Index (RPI) rate fell to 2.9% in August, down from 3.2% in July. July's reading caught out many commentators who forecast a drop to 2.3%, with rising oil prices starting to feed into the reading. However, the latest figure has once again moved inflation back towards the Bank of England's 2% target - and helped vindicate the monetary policy pursued by the Bank. Inflation has come in sharply a...