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Wed, 19 Aug 2026

Wed, 19 Aug 2026 Jump in energy bills drives UK inflation to highest rate for four months

A 2.9% rise in inflation had been widely expected by economists, with Chancellor John Healey saying the Iran war “continues to impact prices here at home”.
UK inflation rose to 2.9% in the year to July, the highest level in four months, driven by higher energy bills and gas prices. According to the Office for National Statistics (ONS), energy costs surged after the US-Iran conflict led to restricted global oil supplies. The price cap on household energy bills was increased by 13% in July, adding £221 a year to the typical bill. The ONS also reported that food inflation slowed to 1.3%, its lowest rate for nearly five years. However, experts say the ongoing heatwave and energy price pressures will continue to push up costs. Homes are forecast to see a 4% rise in energy bills from October, taking them to their highest level since July 2023, according to Cornwall Insight. The US-Iran conflict has led to effective closures of the Strait of Hormuz, a key trading passage for ships carrying oil and other commodities. Chancellor John Healey said the UK's economy is resilient but acknowledged that prices in the UK are being affected by the ongoing conflict. Shadow chancellor Mel Stride said Labour's tax rises and business bashing have driven up costs, while Daisy Cooper from the Liberal Democrats called for the government to "turbocharge" the economy through rejoining the EU single market. Penny Keevil, who runs a crisis support centre, said the cost of living crisis is here to stay, with people on benefits and working people alike struggling to afford food and energy bills. Energy costs are still too high, she added. Experts say inflation is unlikely to influence the Bank of England's interest rate decisions at its next meeting in September. However, KPMG's chief economist Yael Selfin expects energy-related costs to push up inflation to a peak of 3.5% over the coming months.