LONDON / RankWire.AI / – UK inflation accelerated in July as increasing household energy expenses pushed consumer prices to their strongest annual growth since March. The Consumer Prices Index climbed 2.9% compared to the previous year, up from 2.6% in June, with prices rising 0.3% from June to July. This compares to a 0.1% monthly increase in July last year. The Office for National Statistics noted that housing and household services contributed most significantly to the yearly inflation change.
The broader CPIH measure of inflation increased to 3.1% in July from 2.8% in June. CPIH accounts for costs associated with owner-occupied housing and Council Tax. Inflation in housing and household services surged to 4.1%, from 2.7% in June. Gas prices rose 14.7% during July after decreasing 7.2% in the same month last year. Electricity prices increased 3.6%, reversing a 3.8% decline seen in July 2025.
This rise followed a 13% increase in the household energy price cap for July through September. Ofgem stated that this change increased the annual cost for a typical dual-fuel household paying by direct debit by £221. Under the previous typical-consumption standard, the annual figure reached £1,862. Rising wholesale gas costs played a role in the cap increase. These changes in regulated energy prices directly influenced the July inflation figures, as households faced higher gas and electricity charges.
Household expenses drive July price hike
Several other consumer categories also experienced stronger annual price increases in July. Furniture and household goods prices went up 1.0% from a year earlier after dropping 0.2% in June. Clothing and footwear inflation rose to 0.5% from negative 0.5%. Conversely, food and non-alcoholic beverage inflation slowed to 1.3%, marking its lowest annual rate since September 2021, which helped limit some of the overall upward pressure on consumer prices.
Transport contributed most to the decrease in annual inflation. Transport inflation slowed to 3.6% in July from 5.7% in June. Diesel prices fell by 8.8 pence per litre during the month to an average of 167.6 pence, while petrol prices declined by 3.1 pence to 152.2 pence per litre. Annual motor-fuel inflation eased to 15.5% from 21.3%. Airfares increased 11.7% between June and July, still below the 30.2% rise seen a year earlier.
Stable core inflation amid easing services
Core CPI inflation remained at 2.6% in July, unchanged from June. This core measure excludes energy, food, alcohol, and tobacco. Goods inflation increased to 2.2% from 1.7%, while services inflation slowed slightly to 3.4% from 3.6%. The headline CPI rate was 0.9 percentage points above the UK’s 2% inflation target. The data indicated that energy-related price increases primarily drove July’s acceleration, while many underlying inflation indicators changed only marginally during the month.
CPIH services inflation held steady at 3.6%, with core CPIH nudging up to 2.9% from 2.8%. Housing and household services remained the largest contributors to CPIH inflation. Lower transport inflation offset some of the upward pressure from household energy costs. Food prices also contributed less to inflation than in previous periods. Overall, the July report revealed a clear division across major sectors, with gas and electricity prices boosting headline inflation, while transport and food prices helped restrain the overall increase.