Energy Price Hike Sparks Inflation Fears

Rising energy prices are expected to send UK inflation soaring back up to 2.9 per cent in July, according to economists.

The recent hike to Ofgem's energy price cap will add 0.5 percentage points to the inflation reading, warned Ellie Henderson of Investec.

This increase is partly offset by easing motor fuel inflation, but still adds pressure to household budgets and complicates the outlook for interest rates.

The UK economy grew at a slower pace in July, with 0.4 per cent growth reported, and economists are sounding the alarm over impending slowdowns caused by higher prices and borrowing costs.