<h1>UK annual inflation stays at 3.8% in August, keeping interest rates on hold and pressuring treasury ahead of budget</h1> UK annual inflation held at 3.8% in August, nearly double the 2% central bank target, driven by continued food and drink price rises despite a fall in airfares, reinforcing expectations that the central bank will keep interest rates on hold. Stubborn inflation has dented the governing party's popularity and intensified scrutiny of the treasury chief, who faces pressure to bring inflation toward target before a November budget that may raise taxes and introduce cost-of-living measures. Markets view further gradual rate cuts as possible later in the year, but economists are split given persistently high inflation and wage growth.