UK Inflation Hits 2.9% as Energy Price Cap Takes Hold

UK inflation rose to 2.9% in July, reaching its highest level in four months, according to official data from the Office for National Statistics (ONS). This increase is largely attributed to a 13% rise in the energy price cap, which has pushed household bills up by around £200 per year.

The Bank of England's base rate currently stands at 3.75%, and economists had been expecting a cut before the latest inflation print. However, with this rebound driven by energy costs, markets are now less likely to see a reduction in interest rates.

The Office for National Statistics tracks around 700 everyday items each month, including essentials like food, clothing, and household goods. The July data shows that prices have risen across various categories, with alcohol-free beer, dashboard cameras, and pet grooming equipment entering the basket, while premium bottled lager and wrapping paper have been removed.

This latest inflation figure has significant implications for households in the UK, who are already feeling the pinch from rising energy costs. The average dual-fuel bill is expected to increase by around £15 per month, adding to the financial strain on many families.