UK Inflation Hits 4-Month High of 2.9% in July on Energy Costs
Rising household gas and electricity bills drive UK inflation to 2.9% in July, the highest level since March, amid Middle East conflicts.
Stock photo for illustration only, not from the actual event
- UK inflation rose to 2.9% in the year to July, marking a four-month high.
- Surging gas and energy costs followed supply disruptions from the US-Israel war with Iran.
- Ofgem raised the household energy price cap by 13%, adding £221 annually.
- Experts expect the Bank of England to hold interest rates steady in September.
The Office for National Statistics (ONS) reported that the UK inflation rate climbed to 2.9% in the 12 months leading up to July, reaching its highest point in four months since March.
Gas prices experienced the sharpest surge in nearly four years, driven by the conflict involving the US, Israel, and Iran, which severely restricted global oil supplies.
Stock photo for illustration only, not from the actual event
Household energy costs escalated after energy regulator Ofgem raised the price cap on gas and electricity by 13% on July 1, resulting in an additional £221 per year for typical household bills.
Independent energy consultancy Cornwall Insight forecasts an additional 4% rise in household energy bills starting in October, which would drive costs to their highest level since July 2023.
"The war in Iran is continuing to affect prices in the UK, but we insist Britain's economy is resilient."
John Healey, Chancellor
Meanwhile, food inflation slowed down to 1.3%, marking its lowest rate in almost five years. Motor fuel price increases also eased to 15.5% compared to a 21.3% jump in the 12 months up to June.
The UK energy crunch highlights the fragility of global supply chains. Geopolitical tensions in the Strait of Hormuz, combined with a European heatwave driving up electricity demand for cooling, continue to exert upward pressure on inflation. Although certain sectors like food inflation are softening, elevated utility costs remain a significant hurdle for domestic purchasing power.
Despite inflation remaining above the Bank of England's 2% target, experts indicate that this latest inflation reading is unlikely to prompt the central bank to alter its key interest rate at the upcoming September meeting.
Source: BBC Politics
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