UK Inflation Hits Highest Level Since March Amid Soaring Energy Prices

The UK's inflation rate has risen to its highest level since March, driven by a sharp increase in gas prices following a change to the energy price cap. According to official figures, Consumer Prices Index (CPI) inflation increased from 2.6% in June to 2.9% in July.

The rise in energy bills contributed significantly to the higher inflation rate, with core inflation remaining at 2.6%. However, the ONS' preferred metric, CPIH, rose from 2.8% to 3.1%, with housing and household services making the largest upward contributions.

Food manufacturers have learned from previous energy shocks and are adapting contracts and diversifying suppliers to keep costs down, but supply chain disruption and extreme weather will make it challenging for them to absorb higher costs.