Inflation in the United Kingdom held steady at an annual rate of 2.2% in August, with higher airfares offset by lower fuel costs and restaurant and hotel bills, official figures showed Wednesday.

The latest reading from the Office of National Statistics (ONS) means inflation remains just above the Bank of England's (BoE) target of 2%.

The data fuels expectations that the BoE would decide against a successive interest-rate cut this week. Last month, the bank reduced its main interest rate by a quarter-point to 5%, the first cut since the onset of the pandemic.

Central banks around the world dramatically increased borrowing costs from near zero during the coronavirus pandemic when prices started to shoot up, first as a result of supply chain issues built up during the pandemic and then because of Russia's full-scale invasion of Ukraine, which pushed up energy costs.

"Years of sky-high inflation have taken their toll, and prices are still much higher than four years ago," Darren Jones, a senior official at the U.K. Treasury, said in response to Wednesday's data.

Most economists think the bank will opt to keep borrowing costs unchanged after its latest policy meeting on Thursday as a majority of the nine-member Monetary Policy Committee (MPC) remains wary about inflation in the crucial services sector.

Wednesday's data showed that services sector inflation – an indicator of domestic price pressures – jumped to 5.6% in August from 5.2% in July.

One factor behind the rise was a 22.2% jump in airfares between July and August. Fares usually rise between the two months, but the statistics office said the jump was the second largest since records began in 2001.

"This was offset by lower prices at the pump as well as falling costs at restaurants and hotels," said Grant Fitzner, chief economist at the ONS.

However, economists think that the central bank will most likely cut again in November, in the wake of the government's budget on Oct. 30.

"A pause on interest rate cuts was already expected ... and today's release cements that view," said Ruth Gregory, deputy chief U.K. economist at Capital Economics research group.

"We continue to assume the next 25 basis-point rate cut will take place in November."

The new Labour government has said that it needs to plug a 22 billion pound ($29 billion) hole in the public finances and has indicated that it may have to raise taxes and lower spending, which would likely weigh on the near-term outlook for the British economy and put downward pressure on inflation.

"An interest rate cut on Thursday is looking unlikely with the majority of the Monetary Policy Committee likely to want to assess the impact of next month's budget before deciding when to loosen policy again," said Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales.

Central banks around the world have started cutting interest rates as inflation rates have fallen from multi-decade highs.

The U.S. Federal Reserve is widely expected to cut rates for the first time in four years later on Wednesday, possibly by as much as half a percentage point. Data last week showed inflation at 2.5% in the U.S. and 2.2% in the eurozone, both the slowest increases since 2021.

The sterling strengthened against the dollar after the data was published, and investors trimmed their bets on the BoE cutting rates on Thursday to a roughly 26% chance from more than one in three on Wednesday.

Rate futures suggest investors still expect two quarter-point rate cuts by the end of 2024.

The BoE has signaled it will move carefully on further reductions as wage growth – a big driver of inflation in the services sector – is slowing only gradually.

Despite the acceleration of services prices overall, economists said the trend in the sector – excluding volatile items such as airfares – continued to weaken.

"The underlying story is slowly improving and we think that means faster rate cuts through the winter, even if we're expecting no change at tomorrow's meeting," James Smith, U.K. developed markets economist at ING, said.

But Luke Bartholomew, deputy chief economist at abrdn, said BoE policymakers would likely focus on the various measures of underlying inflation that remain elevated.

Core inflation, which excludes more volatile energy, food and tobacco prices, sped up on a monthly and yearly basis.

"That helps explain why the Bank of England is likely to be somewhat more cautious than the U.S. Federal Reserve in its easing cycle over the next few months," Bartholomew said.

British Prime Minister Keir Starmer's Labour government, which is trying to speed up economic growth, said the data showed inflation was more manageable – it hit a four-decade high of over 11% nearly two years ago – but prices remained high.

Separate data showed manufacturers' costs for raw materials and energy fell by 1.2% in annual terms in August, a bigger drop than expected. Factory selling prices rose by the least since January.