The rise in energy bills has driven a sharp increase in inflation, moving further away from the Bank of England’s target
Inflation rose to 2.9% in July amid higher energy prices and fears the summer’s heatwave could start putting pressure on food costs.
In figures announced today, Consumer Prices Index (CPI) inflation has risen to 2.9% per cent in July, up from a 15-month low of 2.6 per cent in June.
The rise in inflation follows the 13 per cent hike in Ofgem’s energy price cap last month, which saw the average gas and electricity bill increase by £221 to £1,862 a year.
The government’s Great British Summer Savings Scheme, which cuts prices on family attractions and children’s meals thanks to a VAT reduction until September, may have helped mediate rising inflation – but not enough to prevent it moving further away from the Bank of England’s 2 per cent target.
There are also concerns over food inflation, with producers warning earlier this week that soaring temperatures and droughts across the UK and Europe are set to drive prices higher.
The Food and Drink Federation said “fruit, vegetable and grain supply” are being hit by recent heatwaves, with crop shortages set to feed in to supermarket prices.
Economists from the trade group suggested that this will put upward pressure on food inflation going into 2027.
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