Inflation in the UK slipped slightly in August to 2.7% from 2.8% in July, as prices for petrol and clothing eased, but it still outpaced pay increases and remained above the government's 2.0% goal for the 45th consecutive month. "Weekly earnings are up only 1.1% year-on-year and have been undershooting inflation for much of the past five years meaning that households have been financing real-term increases in spending through borrowing and the running down of savings," said James Knightley with ING Financial Markets.

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