Goldman Sachs UK: August Headline Inflation Rose as Expected
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Goldman Sachs reviews the August 2026 UK CPI release: headline inflation rose to 3.1% year-on-year (precisely 3.09%) from 2.9% in July, in line with consensus (3.1%) and Goldman's forecast (3.14%) but 0.3pp above the Bank of England's projection (2.83%). Energy drove the upside—energy inflation jumped from 9.8% to 13.8% on higher petrol, diesel and liquid-fuel prices and upward adjustments to fixed-rate electricity and gas items; on a seasonally adjusted basis energy rose 3.80% month-on-month within a 0.40% headline m/m print. Core inflation held at 2.6% (2.57%), matching consensus and Goldman (2.62%) and exceeding the BoE (2.46%) by 0.1pp. Services inflation of 3.4% (3.45%) came in slightly below expectations (Goldman 3.49%, consensus 3.5%, BoE 3.26%), dragged by airfares and a sharp drop in the volatile road-recovery component, partly offset by firmer catering, culture services and private rents. Underlying services looked sturdier: excluding volatile items, regulated prices, package holidays and rent, services inflation held at 3.8%—above Goldman's expectation—with the trimmed mean also at 3.8%. Core goods stayed at 0.9% (Goldman expected 1.0%); food, alcohol and tobacco held at 1.6% though monthly momentum firmed, and RPI printed 3.4% (July 3.2%). Goldman expects headline CPI to peak at 3.9% early next year, then decelerate through the rest of 2027 as energy prices decline.
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