LONDON / RankWire.AI / – UK inflation reached its highest point since March in July, mainly because of increased household energy expenses. The Consumer Prices Index went up by 2.9% compared to the previous year, rising from 2.6% in June. This marked the first annual increase since March. Prices also grew by 0.3% from June, whereas July 2025 saw a 0.1% monthly increase. The Office for National Statistics published these figures on August 19.
The wider CPIH measure climbed 3.1% year-on-year in July, up from 2.8% in June. CPIH also grew by 0.3% during the month, after little change in July 2025. This measure includes owner occupier housing costs and Council Tax, which are excluded from the standard CPI. The largest factors pushing up annual inflation were housing and household services. Transport, however, provided the biggest offset against the overall increase.
Inflation in housing and household services accelerated to 4.1% in July, from 2.7% in June. Gas prices surged by 14.7% during July after decreasing by 7.2% in the same month last year. Electricity prices increased by 3.6%, reversing a 3.8% decline a year earlier. Ofgem raised its energy price cap by 13% for July through September. For a typical dual-fuel household paying by direct debit, the cap was set at £1,862 annually, up £221.
Energy Costs Fuel Inflation Rise
Prices for furniture and household goods grew 1.0% compared to last year after falling 0.2% in June. In July, prices in this category dropped 0.4%, compared to a 1.6% decline in July 2025. This was the smallest July decrease since 1989. Clothing and footwear inflation increased to 0.5% from negative 0.5%. Food and non-alcoholic beverage inflation slowed to 1.3%, the lowest since September 2021.
Transport inflation slowed to 3.6% in July from 5.7% in June, helping to limit the overall rise. Diesel prices fell by 8.8 pence per litre to an average of 167.6 pence. Petrol prices dropped 3.1 pence per litre to 152.2 pence. Motor-fuel inflation eased to 15.5% from 21.3%. Airfares increased by 11.7% between June and July, compared with a 30.2% rise during the same period in 2025.
Core Inflation Remains Stable as Services Growth Slows
Core CPI inflation held steady at 2.6% in July, the same as in June. This measure excludes energy, food, alcohol, and tobacco. Goods inflation rose to 2.2% from 1.7%. Meanwhile, services inflation eased slightly to 3.4% from 3.6%. The Bank of England continues to target 2% inflation. Its Monetary Policy Committee kept the Bank Rate at 3.75% during its July meeting. Six members voted to keep the rate unchanged, while three supported a quarter-point increase.
The July data shows inflation was 0.9 percentage points above the Bank’s target. CPIH services inflation stayed at 3.6%, while core CPIH rose slightly to 2.9% from 2.8%. Housing and household services contributed the most to CPIH inflation for the 25th month in a row. Food’s contribution decreased, and slower transport inflation partly offset higher household energy costs. The next official inflation report is scheduled for September 16, covering August 2026 price changes.