UK Inflation Surges to Highest Level Since March on Gas Price Spike
UK inflation has surged to its highest level since March, driven by a sharp increase in gas prices following an update to the energy price cap. According to the Office for National Statistics (ONS), Consumer Prices Index (CPI) inflation rose to 2.9% in July, up from a 15-month low of 2.6% in June.
The ONS said that the steep rise in the energy cap, which increased the average gas and electricity bill by £221 to £1,862 a year, was only partly offset by lower crude oil costs in July amid hopes of a resolution to the Middle East conflict. However, crude oil has since rocketed back up above 90 US dollars a barrel as the war shows no sign of ending.
Chancellor John Healey said that the Government is taking action to help under-pressure households and the wider economy, but added that there is 'more to do'. The Chancellor pointed out that VAT on electricity bills has been cut and bus fares have been capped at £2 to give breathing space to those feeling the strain.
The latest data also showed Retail Prices Index (RPI) inflation rose to 3.2% last month from 3% in June, with the July rate used to calculate next year's train fare increase. The Government had previously announced that rail fares in England would be frozen in 2026, but it is unclear if this will be extended for a second year.