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UK inflation jumps to 2.9% in July as energy prices surge
The rise followed a rebound in gas and electricity costs after Iran-war disruptions in global energy markets, renewing pressure on households.
UK inflation climbed to 2.9% in July, up from 2.6% in June, as the Office for National Statistics said higher gas and electricity prices pushed up consumer prices. Economists had forecast the same 2.9% reading, matching City expectations.
The data underscored renewed cost of living strain after the Iran-war shock to energy prices sent energy bills higher. The report described the July move as the first increase in the annual rate since March and noted it came after the sharpest summer energy bill rise in four years.
Other contributors included furniture prices falling by less than usual and clothing prices dropping by less due to reduced discounting. Meanwhile, prices of raw materials and goods leaving factories slowed, supported by a drop in crude oil and refined petroleum prices in July.
With inflation proving volatile, the Bank of England is weighing whether to raise interest rates as early as next month, according to the report. The storyline also intersects with the chancellor's upcoming October budget as higher inflation and borrowing costs complicate funding for government priorities, while the government rolled out “breathing space” measures including a plan to cut VAT to reduce consumer electricity bills by an average of £45 a year from October, the Guardian Economics reported.
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