UK Inflation Hits 2.9% as Energy Bills Soar £221

UK inflation has hit 2.9 per cent in July, surpassing the Bank of England's target of 2 per cent, as energy bills surged by £221 on average to £1,862 a year.

The Office for National Statistics reported that gas prices increased sharply in July, with electricity also contributing heavily to inflation. This rise is attributed to wholesale gas costs, which have been affected by the ongoing Iran conflict and supply disruptions in the Gulf and Norway.

Despite this increase, services inflation has eased from 3.6 per cent in June to 3.4 per cent, according to the ONS. Core inflation, excluding energy and food, stood at 2.6 per cent for the 12 months to July.

The Bank of England's Monetary Policy Committee voted six to three to keep interest rates at 4.75 per cent in July. Following this data release, traders trimmed the probability of a quarter-point rate cut in September from 27 per cent to about 18 per cent.