Energy Prices Fuel UK Inflation Surge to 2.9%

UK inflation rose to 2.9% in July, driven by higher energy bills and the ongoing conflict between the US and Iran.

The government's 'Great British Summer Savings' package did not prevent inflation from rising, with annual consumer price inflation taking a significant step up.

Energy prices are expected to continue rising, with Ofgem resetting its price cap in October, which could lead to a 4% increase in energy bills despite the government's VAT cut.

Most economists expect inflation to peak above 3% by the end of the year, while food and drink inflation remains low at 1.3%, its lowest level in five years.