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UK inflation climbs to 2.9% in July amid Iran war energy shock
The Office for National Statistics said the jump from 2.6% in June was driven by higher gas and electricity prices, after a 13% increase in the energy bill cap at the start of July.
UK inflation rose to 2.9% in July as the impact of the Iran war pushed up household energy costs, according to the Office for National Statistics, with economists having forecast the same print.
The ONS said inflation accelerated from 2.6% in June, driven by rising prices for gas and electricity, marking the first increase in the annual rate since March. It noted the July move came after consumers in Great Britain faced the sharpest summer increase in energy bills in four years, following market shock waves from the conflict.
The report linked the cost pressure to a 13% increase in the cap on energy bills at the start of July. It also cited other influences, including furniture prices falling by less than usual and a smaller fall in clothing prices because of reduced discounting, while raw materials and factory gate pressures eased as crude oil and refined petroleum prices fell.
Against the backdrop of a volatile Middle East, the Bank of England is weighing whether to raise interest rates from as early as next month, with fears that stubborn inflation could become entrenched. The article also said Chancellor John Healey is preparing for a difficult October budget, with higher inflation and borrowing costs complicating efforts to fund government priorities.
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