Soaring Energy Bills Push UK Inflation to Near 3%

UK households are bracing themselves for another cost of living crisis as soaring energy bills push inflation to close to 3% in July, according to economists. The Office for National Statistics (ONS) is expected to release figures on Wednesday showing a significant increase in household gas and electricity bills last month.

The energy regulator Ofgem lifted its cap on household gas and electricity bills by 13% in July, adding about 0.44 percentage points to headline inflation. The increase will be partly offset by a fall in petrol and diesel prices, but economists warn that the impact of the conflict in Iran is likely to weigh more heavily in the second half of the year.

The Bank of England is considering raising interest rates from as early as September in response to fears over stubbornly high inflation becoming entrenched in the economy. The central bank predicts UK inflation will reach 3.2% before the end of the year, despite government measures to limit the impact.