UK Inflation Hits 2.9% Amid Energy Price Cap Hike

Inflation in the UK has risen to 2.9% in July, up from 2.6% in June and its highest level since March, as household energy costs continue to soar. The increase followed a 13% rise in Ofgem's energy price cap, with the Bank of England likely to consider whether this is a temporary, energy-driven increase or evidence of more persistent inflation.

Industry professionals are divided on the outlook for interest rates. Jonathan Raymond from Quilter Cheviot predicts one rate rise by year-end, but only if the Bank of England waits for further concerning data before acting. In contrast, Felix Feather from Aberdeen sees the Bank remaining on hold for the rest of the year.

Core inflation remained unchanged at 2.6%, while core services inflation fell back a touch. The increase in energy prices has put pressure on household budgets, with some calling for more government intervention to ease the burden.