UK Inflation Set to Surge as Energy Price Hikes Take Hold

Energy price hikes are expected to drive UK inflation up in July, with most experts forecasting a rate of 2.9%, up from 2.6% in June and the highest since March.

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

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

There are concerns that inflation could continue to rise over the winter months due to potential increases in energy costs, and Victoria Scholar from Interactive Investor is forecasting a peak above 3% later this year.