UK Inflation Hits 2.9% Amid Energy Price Cap Hike
The UK's inflation rate has surged to its highest level since March, reaching 2.9% in July, according to the Office for National Statistics (ONS). This increase is largely attributed to a 13% hike in Ofgem's energy price cap, which raised the average gas and electricity bill by £221 to £1,862 per year.
Kevin Brown, savings expert at Scottish Friendly, warned that families will continue to feel the inflationary fallout from this through their utility bills. He noted that expensive fuel and fertiliser are adding pressure to food production and supply chains, while an exceptionally hot summer poses a threat to harvests.
Alice Haine, head of personal finance at Hargreaves Lansdown, expressed concerns for mortgage holders, stating that sticky inflation limits the scope for interest rate cuts. She noted that two- and five-year swap rates have moved higher, which can feed into mortgage pricing, although competition among lenders has led to some rate cuts this week.
The ONS also reported that the retail prices index (RPI) rate of inflation had risen to 3.2% in July from 3% in June. Mike Hardie, deputy director for prices at the ONS, said that inflation rose due to a sharp increase in gas prices following this month's change to the energy price cap.