UK inflation rose to 2.9% in the twelve months to July, according to the Office for National Statistics (ONS), a rise from 2.6% the previous month. The increase, announced on GB News, was described as a blow for newly appointed Prime Minister Andy Burnham and Chancellor John Healey.
Energy costs drive inflation
Presenters Alex Armstrong and Ellie Costello delivered the news on the breakfast show. Armstrong confirmed: "The UK inflation rate has risen to 2.9% in the twelve months to July, according to the Office for National Statistics...not the news that the government will want to hear today, especially the new Chancellor John Healey."
Costello added: "Indeed, [it's] not looking like it's going in the right direction."
The rise was widely expected by experts and follows a 13% hike in Ofgem's energy price cap last month, which increased the average gas and electricity bill by £221 to £1,862 a year. The increase is the highest rate since March and up from a 15-month low of 2.6% in June.
Expert predictions and ONS comments
Investec economist Ellie Henderson, speaking before the figures were confirmed, said the energy price cap rise alone would contribute an increase of around 0.5%. She said: "It was already clear at the publication of the June print that any easing in inflationary pressures as per the headline measure wouldn’t last for long, with the July increase to the Ofgem energy price cap likely to erase any progress towards the Bank of England’s 2% target."
ONS Deputy Director for Prices Mike Hardie said: "Inflation rose in July, driven by a sharp increase in gas prices following this month’s change to the energy price cap. This was the largest rise in gas prices for almost four years."
He added: "Other upward pressures included furniture prices falling by less than usual for this time of year, and also a smaller fall for clothing prices due to reduced discounting. The prices of raw materials and goods leaving factories slowed again, driven by a drop in the prices of crude oil and refined petroleum respectively."
International comparison and next steps
The inflation rate puts the UK broadly in line with other G7 nations, with France at 2.4% and Germany at 2.8%. Ofgem will announce the next price cap level for October to December on August 26.
