UK Inflation Hits Four-Month High on Energy Bill Surge
UK inflation rose to a four-month high in July due to a surge in household energy bills, according to data released by the Office for National Statistics. The annual consumer price index (CPI) rose to 2.9% from a 15-month low of 2.6% in June.
The increase is attributed to a 13% rise in the maximum tariff British regulators allow energy firms to charge households, as the war in Iran continues with no end in sight. Economists had widely expected this rise, although the Bank of England predicted a smaller increase of 2.8% in its forecasts published last month.
Finance Minister John Healey said that while the Iran war is impacting prices at home, Britain's economy is resilient. The data also show that core inflation, which excludes energy and food prices, remained unchanged at 2.6%, while services inflation eased to 3.4% from 3.6%.
Yael Selfin, Chief Economist at KPMG, expects inflation to reach 3.5%, stating that a gradual rise in inflation is unlikely to spur the Bank of England into action. A survey by Brightmine showed the median pay increase awarded by British employers was the smallest since September at 3.2%.