UK inflation climbs to 2.9% as energy bills bite

Why UK inflation is rising again

The increase was driven largely by household energy costs, after regulator Ofgem lifted its price cap on gas and electricity by 13% on 1 July, as per The Office for National Statistics.

That increase added around £221 a year to energy bills as gas prices climbed at their fastest rate in almost four years.

Energy costs have surged since the US–Iran war began in February, restricting oil supplies and effectively closing the Strait of Hormuz.

Not every number moved the same way: food inflation is at its lowest in five years at 1.3%.

The pressure lands on a government that has made living costs its central promise.

Cutting VAT on electricity bills was an early decision of Andy Burnham's early months as prime minister, in order to give "breathing space to those feeling the strain."

Cornwall Insight forecasts bills rising a further 4% from October, the highest level since July 2023.

Chancellor John Healey said: "There is more to do to restore hope and build a stronger economy where prosperity is shared more fairly across Britain."

ONS prices director Mike Hardie said furniture and clothing, discounted less than usual for the time of year, also pushed the figure up.

Economists quoted in the Guardian's analysis of the squeeze ahead expect further rises this autumn, though little in the data will force the Bank of England's hand in September.