UK Inflation Climbs to 2.9% as Energy Bills Bite

Why UK inflation is rising again

That increase added around £221 a year to a typical bill, and gas prices climbed at their fastest rate in almost four years. Wholesale energy costs have stayed high since the US–Iran war began in February. ONS prices director Mike Hardie said furniture and clothing, discounted less than usual for the time of year, also pushed the figure up. Not every number moved the same way: food inflation slowed to 1.3%, its lowest in close to five years.

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, and JOE has looked at what his reforms mean for your payslip.

We have cut VAT on electricity bills and capped bus fares at £2 — to give breathing space to those feeling the strain. There is more to do to restore hope and build a stronger economy where prosperity is shared more fairly across Britain.

Chancellor John Healey

Cornwall Insight forecasts bills rising a further 4% from October, which would take them to their highest level since July 2023. Economists quoted in the Guardian's analysis of the squeeze ahead expect further rises this autumn, though little in the data is likely to force the Bank of England's hand in September.