Jump in energy bills drives UK inflation to highest rate for four months – BBC News
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Jump in energy bills drives UK inflation up to 2.9% in the 12 months to July, the latest figures show.
Image source: Getty Images
By Faarea Masud, Business reporter
Published: 19 August 2026, 07:08 BST
Updated: 30 minutes ago
Higher energy bills drove UK inflation up to 2.9% in the 12 months to July, according to the Office for National Statistics (ONS).
Gas prices rose at the highest rate in almost four years, leading to an increase in the energy price cap on 1 July.
This is the highest rate of inflation since March, although some price rises have slowed: food inflation, at 1.3%, is at its lowest rate for close to five years.
Experts suggest Wednesday’s inflation figure is unlikely to influence the Bank of England to change its key interest rate from 3.75% at its next meeting in September.
ONS prices director Mike Hardie noted that furniture prices, which fell less than usual for the time of year, contributed to upward pressure on inflation, and clothing was also not being discounted as much.
Chancellor John Healey attributed ongoing effects from the Iran war on UK prices but insisted Britain’s economy was resilient. He highlighted measures taken by the government, such as cutting VAT on electricity bills and capping bus fares.
Shadow chancellor Mel Stride blamed Labour’s "mismanagement" for leaving ordinary people "paying the price" of global shocks.
Energy costs rose on 1 July following an Ofgem increase to the household gas and electricity price cap by 13%, adding £221 a year to typical bills.
Energy bills are expected to rise by 4% from October, according to Cornwall Insight, potentially reaching their highest level since July 2023.
The independent energy consultancy attributes these increases to ongoing uncertainty over the US-Iran conflict and the heatwave across Europe, both of which increase gas demand for power generation.
Penny Keevil, founder of crisis support centre Second Chance Medway, notes a rise in people seeking affordable food assistance, including those with jobs.
British Retail Consortium’s Harvir Dhillon welcomed slower food inflation, pointing to falling prices for pasta, olive oil, and fresh fruit in July. He noted competition among grocers helping to keep a lid on weekly shop costs.
Meanwhile, motor fuel price rises eased to 15.5% compared to 21.3% in the previous 12-month period, although they remain significantly higher than in 2025.
KPMG’s chief economist Yael Selfin observed July as the start of a gradual rise in inflation but doubted Wednesday’s figure would influence the Bank of England’s interest rate decisions.
