UK Inflation Set for Summer Surge as Energy Prices Bite

The UK's inflation rate is expected to surge back up in July due to higher energy prices, according to economists. The Consumer Prices Index (CPI) inflation rate could rise to 2.9% in July, up from a 15-month low of 2.6% in June.

This increase comes after Ofgem's energy price cap rose by 13% last month, resulting in an average gas and electricity bill increase of £221 to £1,862 per year.

Investec economist Ellie Henderson stated that the energy price cap rise alone will add 0.5 percentage points to inflation for July.

Victoria Scholar, head of investment at Interactive Investor, forecasts that inflation is expected to continue rising and could peak above 3% later this year due to elevated energy prices and supply chain disruptions.