Energy bills push UK inflation up to 2.9%

20/08/2026 04:31 AST

Britain's annual inflation rate climbed in July in line with analysts' expectations, driven by higher energy bills, official data showed Wednesday. The Consumer Prices Index (CPI) rose 2.9 percent in the 12 months to July, up from 2.6 percent in June.

The Office for National Statistics (ONS) said in a statement that the rise was spurred by a 13 percent hike in the price cap on household energy bills that took effect last month, a consequence of the ongoing US-Iran war. The ONS called it "the largest rise in gas prices for almost four years".

Britain's new Prime Minister Andy Burnham has pledged to ease cost-of-living pressures, unveiling measures such as a tax cut on household electricity prices and a cap on bus fares.

"Iran war inflation continues to impact prices here at home, but Britain's economy is resilient," Finance Minister John Healey said in response to the latest figures. "There is more to do to restore hope and build a stronger economy where prosperity is shared more fairly across Britain," he added.

The Bank of England held its benchmark interest rate at 3.75 percent last month despite inflation remaining far above its 2 percent target. Analysts expect inflation to rise towards the end of the year as higher energy costs feed through to bills further, with little sign of a deal to end the Middle East war.

"A renewed spike in inflation has been expected as the war in the Middle East continues to navigate a clunky ceasefire," said Jonathan Raymond, investment manager at Quilter Cheviot. "Things remain far from normal in the Strait of Hormuz and look unlikely to be resolved any time soon, meaning pressure is likely to remain on prices for the remainder of the year at least," he added.

AFP