UK Inflation Surges to 2.9% as Energy Price Cap Hike Fuels Gas Price Spike

The UK's inflation rate has surged to its highest level since March, reaching 2.9% in July, according to official figures from the Office for National Statistics (ONS). This represents a jump of 0.3 percentage points from June's 15-month low of 2.6%. The increase is largely attributed to a sharp rise in gas prices, which has led to an average annual energy bill hike of £221 to £1,862.

The ONS attributed the inflation spike to 'a sharp increase in gas prices following this month's change to the energy price cap.' This marks the largest rise in gas prices for almost four years. The steep rise in the energy cap has only been partially offset by lower crude oil costs in July, which had fallen due to hopes of a resolution to the Middle East conflict.

However, crude oil prices have since rebounded, rising above $90 per barrel as the war shows no signs of abating and the critical Strait of Hormuz shipping route remains closed. This development is expected to further exacerbate energy price increases in the coming months.