Energy Price Hike Sends UK Inflation Rate Soaring

The UK's inflation rate is expected to surge back up in July due to higher energy prices. The average gas and electricity bill increased by £221 to £1,862 a year after a 13% hike in Ofgem's energy price cap last month.

Experts forecast that Consumer Prices Index (CPI) inflation will rise to 2.9% in July, up from the 15-month low of 2.6% in June and the highest rate since March.

Economist Ellie Henderson said the energy price cap rise alone will add 0.5 percentage points to inflation for July. She stated: 'It was already clear at the publication of the June print that any easing in inflationary pressures as per the headline measure wouldn’t last for long, with the July increase to the Ofgem energy price cap likely to erase any progress towards the Bank of England’s 2% target.'

There are concerns that inflation will continue to rise due to potential energy cost increases from the Iran war and damage to crops from hot weather, putting pressure on food costs.