UK Inflation Hits Four-Month High Amid Rising Energy Costs

UK inflation has reached a four-month high of 2.9% in July, according to data from the Office for National Statistics. The increase is largely due to a 13% rise in household energy bills, which have become more expensive since last month. This mirrors economists' forecasts and is slightly higher than the Bank of England's prediction of 2.8%.

The central bank may be relieved that there are no surprises in the data, but experts caution that inflation is likely to continue rising. Yael Selfin, Chief Economist at KPMG, predicts inflation will peak at 3.5%, while the Bank of England forecasts a maximum of 3.2%. The current rate is still below the UK's target of 2%.

The increase in energy costs is partly due to the ongoing conflict in Iran, which has disrupted global oil supplies and driven up prices. However, softer labour market conditions may help limit the impact on other areas of the economy. Core inflation, excluding energy and food prices, remained steady at 2.6%.