UK Inflation Set to Bounce Back as Energy Prices Skyrocket

UK inflation is expected to rebound in July as energy prices surge, according to economists. The Office for National Statistics (ONS) will release its Consumer Prices Index (CPI) figures on Wednesday, which are predicted to rise to 2.9%.

The hike in energy prices, announced by Ofgem earlier this month, is expected to add 0.5 percentage points to the inflation reading. The average gas and electricity bill will increase by £221 or 13%, rising to £1,862 per year.

Ellie Henderson from Investec warned that the rise in energy prices will erase any progress towards the Bank of England's two percent target. Thomas Pugh from RSM added that while motor fuel inflation is easing, it won't be enough to offset the pressure on household budgets.