Energy Bills Send Britain's Inflation Rate Soaring Again

Britain's inflation battle is heating up as energy bills soar and crops wither. Economists expect the consumer price index to rise to 2.9% in July, from a 15-month low of 2.6%, marking the highest inflation rate since March.

The immediate culprit is the 13% increase in Ofgem's energy price cap that took effect last month, lifting the typical household's annual gas and electricity bill by £221 to £1,862. This increase alone will add about 0.5 percentage points to July's inflation rate, according to Ellie Henderson, an economist at Investec.

Disruption to energy markets linked to the Iran war and the effective gridlock around the Strait of Hormuz could keep costs elevated into the winter, creating a fresh challenge for the Bank of England.