UK inflation rose to 2.9% in the 12 months to July 2026, up from 2.6% in June, according to the Office for National Statistics (ONS). It was the first increase in the annual rate since March 2026.
On a monthly basis, the Consumer Prices Index (CPI) rose by 0.3% in July, compared with a rise of 0.1% in July 2025.
CPIH, which adds owner occupiers' housing costs and Council Tax to the CPI and is the ONS's most comprehensive measure, rose by 3.1%, up from 2.8%.
Housing and household services made the largest upward contribution to the change in the annual rate, driven by gas and electricity.
Gas prices rose 14.7% in July, against a fall of 7.2% a year earlier, following the change to the Ofgem energy price cap, which rose 13% for the July to September quarter. Electricity prices rose 3.6%, compared with a fall of 3.8% a year ago.
Mike Hardie, deputy director for prices at the ONS, explains: "Inflation rose in July, driven by a sharp increase in gas prices following this month's change to the energy price cap. This was the largest rise in gas prices for almost four years."
Furniture and household goods prices rose 1.0% over the year, having fallen 0.2% in the 12 months to June. Prices fell 0.4% in the month, the smallest July fall since 1989. Clothing and footwear prices rose 0.5% over the year, compared with a fall of 0.5% the previous month.
Hardie adds: "Other upward pressures included furniture prices falling by less than usual for this time of year, and also a smaller fall for clothing prices due to reduced discounting."
Transport made the largest offsetting downward contribution. Prices in the division rose 3.6% over the year, down from 5.7% in June. The average price of diesel fell 8.8 pence per litre between June and July to 167.6 pence, while petrol fell 3.1 pence to 152.2 pence.
Food and non-alcoholic beverage prices rose 1.3% over the year, down from 1.7%. The annual rate was last lower in September 2021.
Core CPI, which excludes energy, food, alcohol and tobacco, was unchanged at 2.6%. Core CPIH rose to 2.9% from 2.8%.
Producer prices, which measure costs further up the supply chain, also eased.
Hardie says: "The prices of raw materials and goods leaving factories slowed again, driven by a drop in the prices of crude oil and refined petroleum respectively."
What it means for your finances
Inflation remains above the Bank of England's 2% target, and July's rise was concentrated in energy costs that many households will already have seen reflected in their bills.
The Bank has held its base rate at 3.75% since the start of the Iran conflict. The Monetary Policy Committee has previously noted concern about the delayed effect of energy price rises on inflation later this year. The latest figures for July continue to reflect this position.
A single month's data does not change a long-term financial plan, however. Long-term approaches built with an adviser already make assumptions about inflation over a long time horizon. If you have any questions or concerns, don't hesitate to get in touch.