UK Inflation Hits 2.9% as Energy Prices Soar

The UK's inflation rate has risen to 2.9% in July, its highest level since March, according to official figures.

This increase is driven by a sharp rise in gas prices following the change to the energy price cap last month, which increased by £221 to £1,862 a year.

Economists predict that inflation will continue to rise and peak above 3% later this year as the economy grapples with higher energy prices and the conflict in the Middle East.

Victoria Scholar, head of investment at Interactive Investor, expects the Bank of England to raise interest rates from 3.75% to 4% by the end of the year to temper the risk of overheating and help push inflation back towards its 2% target.