UK Inflation Hits 2.9%, Fueling Interest Rate Hike Fears

UK inflation rose sharply to 2.9% in July, surpassing the previous reading of 2.6%, according to data from the Office for National Statistics (ONS). The increase was largely driven by higher energy prices.

The services sector saw a slight easing to 3.4% inflation, while core inflation, which strips out food and energy costs, remained at 2.6%. Deputy director of prices at the ONS, Mike Hardie, noted that furniture and clothing price drops were slower than usual this time of year.

Chancellor John Healey emphasized Britain's economy remains resilient despite external factors like the Iran war impacting domestic prices. He backed government measures to ease cost-of-living pressures on families.

Economists are divided on whether the Bank of England will raise interest rates in response to rising inflation. While some, like Felix Feather from Aberdeen, believe the Bank may opt for 'modest tightening', others predict a more significant hike to combat inflation fears.