UK Inflation Soars as Energy Price Hike Takes Hold

UK inflation is expected to surge as higher energy prices take hold.

The average gas and electricity bill has increased by £221 to £1,862 a year due to Ofgem's 13% hike in the energy price cap last month.

This increase alone will add 0.5 percentage points to inflation for July, according to Investec economist Ellie Henderson.

She notes that any easing of inflationary pressures was already short-lived and this latest rise is likely to erase progress towards the Bank of England's 2% target.

Victoria Scholar, head of investment at Interactive Investor, forecasts that inflation will continue to rise, peaking above 3% later this year.

This increase in energy prices comes on top of concerns about food costs, as the hot weather damages crops and puts pressure on supermarkets to pass on higher prices to consumers.