UK Inflation Rises to 2.9% as Energy Bills Jump
Consumer-price inflation reached a four-month high in July after a 13% increase in the household energy price cap reflected higher global gas costs linked to the war in Iran.
UK consumer-price inflation rose to 2.9% in the year to July, up from 2.6% in June and the highest annual rate in four months, as higher household energy bills began feeding through to the official figures.
The increase was driven chiefly by housing and household services, including gas and electricity.
The energy regulator raised its price cap by 13% from July, lifting the annual bill for a typical household using direct debit to £1,862.
The change was the first adjustment to reflect the higher global energy costs that followed the war in Iran and disruption across Middle Eastern energy markets.
The 2.9% figure is the annual inflation rate, not the size of the increase in energy bills.
Household energy prices were a much larger part of the immediate rise: gas prices were 14.7% higher than a year earlier, their sharpest annual increase since October 2022.
The Bank of England has said the conflict in the Middle East has made energy prices highly volatile.
Oil prices have moved sharply as the conflict and ceasefire expectations have shifted, while higher wholesale gas prices have raised the cost of supplying British households and businesses.
Some underlying measures were more stable.
Core inflation, which excludes energy and food, held at 2.6%.
Food and non-alcoholic drink inflation slowed to 1.3% from 1.7% in June, helping to limit the broader rise in consumer prices.
Transport costs also rose more slowly than in the previous month.
The increase nevertheless adds pressure to household budgets after a period of easing inflation.
Higher energy costs can also spread through the economy as businesses pass on part of their larger operating bills in the prices charged for goods and services.
The Bank of England kept its main interest rate at 3.75% in July.
It has warned that inflation could rise above 3% later this year if energy prices remain elevated, while also saying there is limited evidence so far that the shock has become embedded in wider wage and price-setting.
The next official inflation release, covering August, is scheduled for September 16. It will provide the next measure of whether higher energy costs are continuing to push inflation further away from the Bank's 2% target.
The increase was driven chiefly by housing and household services, including gas and electricity.
The energy regulator raised its price cap by 13% from July, lifting the annual bill for a typical household using direct debit to £1,862.
The change was the first adjustment to reflect the higher global energy costs that followed the war in Iran and disruption across Middle Eastern energy markets.
The 2.9% figure is the annual inflation rate, not the size of the increase in energy bills.
Household energy prices were a much larger part of the immediate rise: gas prices were 14.7% higher than a year earlier, their sharpest annual increase since October 2022.
The Bank of England has said the conflict in the Middle East has made energy prices highly volatile.
Oil prices have moved sharply as the conflict and ceasefire expectations have shifted, while higher wholesale gas prices have raised the cost of supplying British households and businesses.
Some underlying measures were more stable.
Core inflation, which excludes energy and food, held at 2.6%.
Food and non-alcoholic drink inflation slowed to 1.3% from 1.7% in June, helping to limit the broader rise in consumer prices.
Transport costs also rose more slowly than in the previous month.
The increase nevertheless adds pressure to household budgets after a period of easing inflation.
Higher energy costs can also spread through the economy as businesses pass on part of their larger operating bills in the prices charged for goods and services.
The Bank of England kept its main interest rate at 3.75% in July.
It has warned that inflation could rise above 3% later this year if energy prices remain elevated, while also saying there is limited evidence so far that the shock has become embedded in wider wage and price-setting.
The next official inflation release, covering August, is scheduled for September 16. It will provide the next measure of whether higher energy costs are continuing to push inflation further away from the Bank's 2% target.