UK Inflation Hits 4-Month High as Housing Costs Surge

UK inflation has reached its highest level in four months, according to data released this week. The annual rate rose to 2.9% in July 2026, meeting market expectations and surpassing June's 2.6%. Housing and household services contributed the most to the increase, with prices rising by 4.1% from 2.7% in June.

The upward trend was also seen in furniture and household goods (up 1.0% vs -0.2%), clothing and footwear (up 0.5% vs -0.5%), alcohol and tobacco (up 2.5% vs 2.1%), and health (up 3.7% vs 2.5%). However, transport inflation slowed down due to lower motor fuel prices, particularly diesel.

The average price of diesel decreased by 8.8 pence per litre between June and July 2026. Food inflation also eased from 1.7% to 1.3%. On a monthly basis, the Consumer Price Index (CPI) increased by 0.3%, aligning with market forecasts.