UK Inflation Rises To 2.9% In July As Energy Bills Increase

UK Inflation Rises to 2.9% in July as Energy Bills Increase

UK inflation rose to 2.9% in the year to July 2026, up from 2.6% in June, according to the latest figures from the Office for National Statistics ONS. The increase was broadly in line with economists’ expectations. The rise was driven largely by higher household energy costs after the Ofgem energy price cap increased by 13% in July. Gas prices jumped by 14.7%, while electricity prices rose by 3.6%.

The latest figure puts inflation further above the Bank of England’s 2% target, increasing pressure on policymakers as they weigh the outlook for interest rates and the cost of living. There were, however, some signs that underlying price pressures remain contained. Core inflation held at 2.6%, while services inflation eased to 3.4% from 3.6% in June. Food and non-alcoholic beverage inflation also slowed to 1.3%, its lowest level in almost two years. Transport costs provided some offset, with transport inflation falling to 3.6% from 5.7% in June, helped by lower motor-fuel prices. The Bank of England had previously forecast inflation could rise further, potentially reaching 3.2% later in 2026, as energy-price pressures continue to feed through the economy. The acceleration in inflation adds to pressure on household budgets and complicates the Bank of England’s decisions on interest rates, particularly as policymakers try to balance persistent price pressures against signs of a softer labour market. UK inflation has moved back up to 2.9%, largely because of higher energy bills, although easing food and services inflation suggests that broader price pressures have not accelerated to the same extent.