UK Inflation Rises to 2.9% in July as Household Energy Bills Surge

LONDON: UK annual consumer price inflation rose to 2.9 percent in July, up from 2.6 percent in June, reaching its highest level in four months, according to official data released on Wednesday.

The increase was largely driven by higher household energy bills following a 13 percent rise in the maximum tariff allowed for domestic energy suppliers. The July figure was in line with economists’ expectations, while the Bank of England had previously forecast inflation at 2.8 percent for the month.

The latest figures are expected to reinforce concerns over continued cost-of-living pressures, although a weaker labour market could help contain broader inflationary pressures. The Bank of England currently expects inflation to peak at around 3.2 percent later this year.

Core inflation, which excludes energy and food prices, remained unchanged at 2.6 percent in July, slightly above economists’ expectations of 2.5 percent. Services inflation, closely monitored by the central bank, eased to 3.4 percent from 3.6 percent in June.

Meanwhile, inflation in food and non-alcoholic beverages slowed to 1.3 percent, its lowest level in nearly two years, suggesting that strong competition among supermarkets has helped limit price pressures.

Separate data showed that factory-gate inflation eased to 3.1 percent in July from 3.5 percent in June, while manufacturers’ input cost growth fell to 4.9 percent from 7.4 percent.

Economists said the latest inflation figures were unlikely to prompt an immediate change in Bank of England policy, noting that softer labour-market conditions could limit the wider impact of higher energy costs.