19/08/2026
🚨 UK inflation is back on the rise, reaching 2.9% in July.
That’s up from 2.6% in June and marks the first increase since March. The biggest driver? Higher household energy costs.
The energy price cap jumped 13% at the start of July, following disruption to global energy markets caused by the conflict in the Middle East. That pushed gas and electricity bills higher and helped drive the overall inflation rate back up.
And there could be more pressure to come, with experts forecasting another 4% increase in the energy price cap from October, which could take typical annual bills to a three-year high.
So, what does that actually mean for you? 👇
💷 Your money doesn’t stretch as far: Inflation of 2.9% means prices overall are 2.9% higher than they were a year ago.
🏦 It matters for interest rates: Inflation remains above the Bank of England’s 2% target, so the Bank will be watching closely when deciding what happens to the base rate. However, underlying inflationary pressures are showing some signs of easing: services inflation fell from 3.6% to 3.4%, while core inflation remained at 2.6%.
⚡ Energy remains the big uncertainty: What happens next will depend partly on global energy prices and the ongoing conflict in the Middle East.
There was some good news, though: food inflation fell to 1.3%, its lowest level in close to five years, according to the latest figures.
The takeaway? Inflation is moving in the wrong direction again, largely because of energy costs. That could put more pressure on household budgets, and makes what happens to interest rates over the coming months one to watch.
Sources: ONS, BBC News, The Guardian & Cornwall Insight. August 2026.
