UK Inflation Set for Summer Surge Amid Energy Price Hike

UK inflation is expected to surge back up in July, driven by the recent hike in energy prices. The Consumer Prices Index (CPI) is forecasted to rise to 2.9% in July, up from a 15-month low of 2.6% in June and the highest rate since March.

The 13% increase in Ofgem's energy price cap last month saw the average gas and electricity bill jump by £221 to £1,862 a year. This is expected to add 0.5 percentage points to inflation for July, according to Investec economist Ellie Henderson.

Cross-country tensions and soaring temperatures are also causing concerns about food costs, with crop shortages set to drive prices higher. Economists warn that this could push inflation above 3% later this year.