LONDON / RankWire.AI / – UK inflation climbed to 2.9% in July as consumer prices were pushed upward mainly due to rising household energy bills, marking the strongest annual increase since March. The Consumer Prices Index saw a 0.3% jump from June, compared to a 0.1% rise in July last year. The Office for National Statistics indicated that housing and household services contributed most significantly to the annual inflation shift.
The broader CPIH inflation rate also increased, reaching 3.1% in July from 2.8% in June. This measure includes costs related to owner-occupied housing and Council Tax. Inflation for housing and household services surged to 4.1%, up from 2.7% in June. During July, gas prices rose by 14.7% after decreasing 7.2% in the same month last year. Electricity costs also increased by 3.6%, reversing a 3.8% decline recorded in July 2025.
This upward movement followed a 13% increase in the household energy price cap for July through September. Ofgem stated that this change raised the annual cost for an average dual-fuel household paying by direct debit by £221. Previously, under the typical-consumption benchmark, the annual figure reached £1,862. The rise was driven by higher wholesale gas prices, which contributed to the cap increase. As a result, regulated energy prices directly impacted July’s inflation figures, with households facing higher gas and electricity expenses.
Household expenses fuel the July inflation rise
Other consumer categories also saw stronger annual price increases in July. Furniture and household goods prices increased by 1.0% compared to the previous year, after a 0.2% decline in June. Meanwhile, inflation in clothing and footwear rose to 0.5%, from negative 0.5%. Conversely, food and non-alcoholic beverage prices slowed to 1.3%, the lowest annual rate since September 2021, which tempered some of the overall upward pressure on consumer prices.
Transport costs contributed most to the decrease in the annual inflation rate. Transport inflation slowed to 3.6% in July from 5.7% in June. Diesel prices fell by 8.8 pence per litre on average to 167.6 pence, and petrol prices dropped 3.1 pence to 152.2 pence per litre. The annual inflation for motor fuels eased to 15.5% from 21.3%. Additionally, airfares increased by 11.7% between June and July, which was below the 30.2% rise seen a year earlier.
Core inflation remains stable as services inflation declines
Core CPI inflation held steady at 2.6% in July, unchanged from June. This core measure excludes energy, food, alcohol, and tobacco. Prices for goods increased to 2.2%, up from 1.7%, while services inflation eased slightly to 3.4% from 3.6%. The headline CPI rate remains 0.9 percentage points above the UK’s 2% inflation target. The data shows that energy-related price increases were the primary driver of July’s acceleration, with other underlying inflation indicators changing only modestly during the period.
CPIH services inflation stayed at 3.6%, while core CPIH moved up marginally to 2.9% from 2.8%. The largest contribution to CPIH inflation continued to come from housing and household services. A slowdown in transport inflation helped offset some of the inflationary pressure from higher household energy costs. Food prices also contributed less to inflation than in previous months. Overall, July’s figures reveal a clear divide among major categories, with gas and electricity prices pushing headline inflation upward, while transport and food prices helped moderate the overall increase.