UK Inflation Hits Four-Month High as Energy Costs Soar

The UK's inflation rate rose to 2.9% in July, exceeding expectations and marking a four-month high.

Services inflation, closely watched by the Bank of England, fell to 3.4%, while core inflation remained at 2.6%. The data suggests another interest rate hike could be on the table this year, but the labour market's softening and tepid economy may limit its impact.

The rise in energy costs is a major contributor to inflation, with household bills increasing by 13% last month. This is a significant difference from 2022, when higher energy prices led to broader cost increases across the economy.