UK Inflation Hits Four-Month High on Energy Price Spike

UK inflation has reached its highest rate in four months, driven by higher energy bills. The Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI) rose to 2.9% in the 12 months to July.

The increase was largely due to a 13% hike in the price cap on household gas and electricity bills, which added £221 a year to the typical household's bill. This marked the largest rise in gas prices for almost four years.

According to ONS prices director Mike Hardie, furniture prices also contributed to the upward pressure on inflation, as they fell by less than usual for that time of year. Clothing was another factor, with discounts not being offered as much as they typically are during this period.

Chancellor John Healey acknowledged that global events, including the ongoing conflict in Iran, were affecting prices in the UK. However, he maintained that Britain's economy remains resilient and pointed to measures such as cutting VAT on electricity bills and capping bus fares at £2 as evidence of the government's efforts to support those feeling the strain.

KPMG's chief economist Yael Selfin noted that July marked a gradual rise in inflation, but stated that the current figure was not enough to spur change in the Bank of England's interest-rate setting decisions. She predicted that energy-related costs would push inflation higher over the coming months, potentially peaking at around 3.5%.

Shadow Chancellor Mel Stride criticized Labour's 'mismanagement', claiming it left ordinary people paying the price for global shocks.