Overview
- The Office for National Statistics reported on Wednesday that annual CPI inflation climbed to 2.9% in July from 2.6% in June, reversing a month of easing.
- Ofgem’s 13% July energy price cap increase raised the typical annual gas and electricity bill by about £221 to £1,862 and the ONS said the rise was driven by a sharp jump in gas prices.
- Core inflation held at 2.6% and services inflation eased to 3.4%, while food price inflation fell to about 1.2–1.3% as supermarkets used heavy discounting to shield shoppers.
- Most economists expect the Bank of England to hold Bank Rate at 3.75% in September, but many forecast headline CPI will rise again later this year with some groups projecting peaks above 3%.
- Households face higher near‑term bills despite government measures such as a VAT cut on domestic electricity and a £2 bus fare cap, and markets are watching the Ofgem Oct–Dec cap on August 26 as the next key uncertainty.