The UK's annual inflation rate held steady at 2.2% in August, unchanged from July, according to official data released on Wednesday. However, inflation in the services

sector, a key focus for the Bank of England (BoE), saw a notable rise.

A Reuters poll of economists had predicted that the consumer price inflation would remain at 2.2%.

The BoE, which reduced interest rates to 5% on August 1, had projected inflation to reach 2.4% in August and rise further to around 2.75% by the end of the year.

The British central bank is set to announce its latest decision on interest rates this Thursday.

"Years of high inflation have significantly impacted households, and prices remain considerably higher than they were four years ago," said Darren Jones, a junior minister at the Treasury. He added that the current lower inflation rate is a welcome change.

Inflation in the services sector, a key measure of domestic price pressures, rose to 5.6% in August from 5.2% in July, exceeding the Reuters poll forecast of a smaller increase to 5.5%.

Following the release of the inflation data, the British pound strengthened against the US dollar.