UK Inflation Hits 2.9% as Iran War Pushes Up Fuel Costs

UK inflation rose to 2.9% in July as the Iran war pushed up fuel costs, hitting British households with a renewed cost of living squeeze.

The Consumer Prices Index (CPI) increased from 2.6% in June, while the CPI including owner-occupiers' housing costs (CPIH) rose to 3.1% over the past 12 months, up from 2.8% previously.

Housing and household services made the largest upward contributions to the monthly change in both CPIH and CPI annual rates, with gas and electricity prices increasing due to a rise in standard variable tariffs following an Office of Gas and Electricity Markets (Ofgem) energy price cap increase in July 2026.

The price cap rose in part because of higher wholesale energy prices affected by the outbreak of the conflict in the Middle East, according to the ONS.