UK Inflation Hits 2.9% as Energy Price Cap Hike Takes Hold

UK inflation rose to 2.9% in July, up from 2.6% in June, according to the Office for National Statistics (ONS). The increase was mainly driven by a hike in the energy price cap, which led to a sharp rise in gas prices.

The ONS Deputy Director for Prices, Mike Hardie, said that inflation rose in July due to a 'sharp increase in gas prices following this month's change to the energy price cap'. He added that other upward pressures included furniture prices falling by less than usual and clothing prices decreasing due to reduced discounting.

Neil Kadagathur, CEO of Creditspring, warned that the rise in inflation could put pressure on household finances. He noted that higher fuel costs may offset some progress in underlying inflation and called for households to review their finances and make adjustments accordingly.

Caterina Batog, Research and Economics Analyst at the British Chambers of Commerce, said that firms continued to feel the heat from inflation last month, with CPI rising to 2.9%. She emphasized that energy remains a major issue for businesses, who aren't subject to a price cap.