UK inflation rose to 2.9% in July, an increase from the 15-month low of 2.6% recorded in June. This acceleration means the cost of goods and services is now rising at a faster pace compared with the previous month.
The rise was driven by a surge in energy bills, specifically a 13% jump in the energy price cap. This represents the sharpest increase in gas prices seen in almost four years and was triggered by the impact of the Iran war on energy prices.
This renewed cost of living squeeze presents a challenge for Andy Burnham’s government in providing breathing space to hard-pressed consumers. However, a slowdown in jobs could potentially deter the Bank of England from raising interest rates.