LONDON / RankWire.AI / – UK inflation increased to its highest level since March in July, mainly due to higher household energy expenses. The Consumer Prices Index climbed 2.9% compared to the previous year, up from 2.6% in June. This marked the first annual increase since March. Prices rose 0.3% from June, contrasting with a 0.1% monthly rise in July 2025. The Office for National Statistics published these figures on August 19.
The broader CPIH measure saw a 3.1% annual increase in July, faster than the 2.8% recorded in June. CPIH also grew by 0.3% during the month, showing little change compared to July 2025. This measure includes owner-occupier housing costs and Council Tax, which the standard CPI excludes. Housing and household services contributed most to the rise in annual inflation. Conversely, transport provided the largest offset to the overall increase.
Housing and household services inflation accelerated to 4.1% in July from 2.7% in June. Gas prices jumped 14.7% during July after falling 7.2% last year in the same month. Electricity prices increased 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, an increase of £221.
Energy expenses push inflation upward
Furniture and household goods prices were 1.0% higher than a year ago, following a 0.2% decline in June. Prices in that category fell 0.4% during July, compared with a 1.6% decrease in July 2025. This was the smallest July fall for the category since 1989. Clothing and footwear inflation rose to 0.5% from negative 0.5%. Food and non-alcoholic beverage inflation slowed to 1.3%, marking its lowest annual rate since September 2021.
Transport inflation eased to 3.6% in July from 5.7% in June, helping to limit the overall increase. Diesel prices dropped 8.8 pence per litre during the month to an average of 167.6 pence. Petrol prices decreased 3.1 pence per litre to 152.2 pence. Annual inflation for motor fuels slowed to 15.5% from 21.3%. Airfares increased 11.7% between June and July, compared with a 30.2% rise during the same period in 2025.
Core inflation remains steady as services grow less
Core CPI inflation stayed at 2.6% in July, unchanged from June. This measure excludes energy, food, alcohol, and tobacco. Goods inflation increased to 2.2% from 1.7%, while services inflation slowed to 3.4% from 3.6%. The Bank of England maintains a 2% inflation goal. Its Monetary Policy Committee kept the Bank Rate at 3.75% at the July meeting, with six members voting to hold and three supporting a quarter-point increase.
These July figures place headline CPI inflation 0.9 percentage points above the central 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 remained the main contributors to CPIH inflation for the 25th consecutive month. Food contributed less to inflation, while slower transport inflation partly offset higher household energy costs. The next official consumer inflation report is scheduled for September 16, covering August 2026 price movements.