{
  "id": 1241599,
  "title": "Soaring energy bills set to fuel inflation spike",
  "url": "https://urgent.news/2026/08/16/soaring-energy-bills-set-to-fuel-inflation-spike",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-16T08:57:14.000Z",
  "source": {
    "name": "City AM",
    "slug": "city-am",
    "url": "https://www.cityam.com/soaring-energy-bills-set-to-fuel-inflation-spike/"
  },
  "original_language": "en",
  "account": "Rising energy prices are set to push UK inflation back up, with economists warning that the summer economic boost may be temporary. The Consumer Prices Index (CPI) inflation rate is expected to climb to 2.9% in July, up from the 15-month low of 2.6% in June, according to the Office for National Statistics (ONS). Despite the UK's summer economy receiving a lift from frequent heatwaves and the World Cup, Ofgem's recent increase in its energy price cap has raised concerns. In July, the energy regulator permitted households' average gas and electricity bills to surge by £221, or 13%, to £1,862 per year. This jump in energy prices alone is projected to contribute 0.5 percentage points to July's inflation reading, as stated by Ellie Henderson, an economist at Investec. She cautioned that the June price measure's easing of inflationary pressures would not persist for long, with the Ofgem energy price cap rise likely to negate any strides toward the Bank of England's two percent target. The inflationary impact of the price cap rise will be somewhat mitigated by a decrease in motor fuel inflation, yet it will still impose \"fresh pressure on household budgets and [complicate] the outlook for interest rates,\" according to RSM chief economist Thomas Pugh. Earlier, UK economic growth decelerated to 0.4%, signaling a potential slowdown due to higher prices and borrowing costs stemming from the Iran war that are now permeating the economy. Industry experts had earlier highlighted that escalating food inflation, potentially reaching 10% this year, would be a consequence of the Middle East conflict. Food inflation might dip slightly in July due to lower wholesale food prices from the end of last year, before climbing again later in the year. The Food and Drink Federation warned that fruit, vegetable, and grain supply issues caused by recent heatwaves are driving up crop shortages, which will eventually impact supermarket prices. Analysts at Investec cautioned that this could be exacerbated by the effects of an El Nino weather event, which \"risks reinforcing upward price pressures.\" The government's Great British Summer Savings Scheme, unveiled earlier this year by former Chancellor Rachel Reeves, cut VAT on family attractions and children's meals until September. While economists believe this will marginally dampen inflation, it is insufficient to prevent the headline rate from moving further away from the Bank of England's two percent target. Victoria Scholar, head of investment at Interactive Investor, predicted that the Bank will likely implement roughly a 25 basis point hike by the end of the year to curb the risk of overheating and aid in bringing inflation back in line with its target.",
  "summary": "Rising energy prices are poised to send UK inflation rearing back up, as economists warn that the summer boost to the economy could be fleeting. The rate of Consumer Prices Index (CPI) inflation is tipped to rise to 2.9 per cent in July, climbing from June’s 15-month low of 2.6 per cent, when the Office [...]",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 2,
    "also_reported_by": [
      {
        "outlet": "Guardian Business",
        "title": "New UK cost of living crisis looms with soaring energy bills forecast to lift inflation",
        "url": "https://urgent.news/2026/08/16/new-uk-cost-of-living-crisis-looms-with-soaring-energy-bills-forecast",
        "published": "2026-08-16T05:00:16.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}