The UK’s inflation rate has moved higher again, providing an unwelcome reminder that the battle to bring prices under control is far from over.
Consumer price inflation rose to 2.9% in July 2026, up from 2.6% in June and moving further above the Bank of England’s 2% target.
The increase was largely driven by higher household energy costs following the latest rise in the energy price cap.
No all negative
Gas prices increased sharply, putting renewed pressure on household budgets and pushing housing and household services inflation higher. For millions of families, the effect will be felt directly through larger energy bills.
However, the figures are not entirely negative. Food inflation eased to 1.3%, while services inflation fell from 3.6% to 3.4%. Core inflation, which strips out some of the more volatile components, remained at 2.6%.
Bank of England dilemma
That creates a difficult picture for the Bank of England. Inflation is moving in the wrong direction, but some of the underlying pressures are continuing to moderate.
The latest figures therefore make further interest-rate cuts more complicated. The Bank will want to avoid reigniting inflation, while also recognising that higher borrowing costs can weigh heavily on an already fragile economy.
For consumers, however, the message is simpler: the cost-of-living squeeze is easing, but it certainly isn’t over.