UK July CPI rises to 2.9% as household energy costs jump

British consumer price inflation climbed to 2.9% over the past year in July, up from 2.6% in June, according to the Office for National Statistics. This marked the first increase in the annual rate since March. The surge was primarily driven by a significant 13% jump in the Ofgem household energy price cap, which caused the steepest increase in gas prices since October 2022.

Housing and household services experienced the largest upward contribution, with gas prices surging 14.7% and electricity prices rising 3.6%. These factors more than offset a decline in motor fuel costs.

Core inflation, which excludes food and energy costs, remained steady at 2.6%, aligning with economists' expectations of a slight easing. The Consumer Price Index including Housing (CPIH), which incorporates housing costs, increased to 3.1% from 2.8%. The data suggested that the impact of higher energy prices resulting from the Middle East conflict was confined to specific categories rather than permeating across the broader inflation landscape.