UK Inflation Hits Four-Month High on Energy Bill Hikes

UK inflation has reached its highest level in four months due to sharp increases in household energy bills. The annual consumer price index (CPI) rose 2.9% in the 12 months to July, up from 2.6% in June.

The Office for National Statistics (ONS) cited a 13% hike in the price cap on household energy bills as the main driver of the inflation increase. This was the largest rise in gas prices in almost four years, according to the ONS.

Britain's new Prime Minister, Andy Burnham, has pledged to ease cost-of-living pressures with measures such as a tax cut on household electricity prices and a cap on bus fares. Treasury chief John Healey stated that 'Iran-war inflation continues to impact prices here at home, but Britain's economy is resilient.'

Analysts expect inflation to rise further towards the end of the year due to higher energy costs feeding through to bills. The Bank of England held its benchmark interest rate at 3.75% last month despite inflation remaining far above its 2% target.