UK Inflation Hits 2.9% Amid Energy Price Surge

UK inflation has risen to 2.9% in July, up from a 15-month low of 2.6% in June, according to data from the Office for National Statistics (ONS). The increase is attributed to higher energy prices, which rose by 13% following Ofgem's energy price cap hike last month.

The average gas and electricity bill has increased by £221 to £1,862 a year. Mike Hardie, deputy director for prices at the ONS, said that inflation rose in July due to 'a sharp increase in gas prices following this month's change to the energy price cap'. Other upward pressures on inflation included furniture prices falling less than usual and clothing prices declining by a smaller margin.

The government's Great British Summer Savings Scheme, which reduced VAT on family attractions and children's meals, had some impact on prices but did not significantly affect headline consumer inflation. The ONS said that the policy 'did not have a substantial overall impact on headline consumer inflation'.

The Iran war has caused energy prices to rise further, with crude oil costs increasing above $90 a barrel as the conflict continues. The Bank of England may need to raise interest rates from 3.75% to 4% by the end of the year to combat rising inflation.