UK Inflation Set to Surge Back Towards 3 Per Cent

UK inflation is set to rise back towards 3 per cent in July, according to economists, as soaring energy bills take hold across British households.

The Office for National Statistics will release its figures on Wednesday, which are expected to show a surge back up to 2.9 per cent after June's 15-month low of 2.6 per cent.

Rising energy costs are the main culprit behind this expected increase in inflation, with the energy regulator Ofgem raising its price cap in July. This allowed average annual gas and electricity bills to climb by £221, a 13 per cent increase, bringing the typical household bill to £1,862 per year.

Economist Ellie Henderson warned that 'it was already clear at the publication of the June print that any easing in inflationary pressures as per the headline measure wouldn’t last for long, with the July increase to the Ofgem energy price cap likely to erase any progress towards the Bank of England’s two per cent target.'

The impact on household budgets is being felt across multiple sectors. Analysts at Investec noted that an El Nino weather event could compound pressures further, warning it 'risks reinforcing upward price pressures' across global food markets.