LONDON / RankWire.AI / – UK inflation experienced an uptick in July, driven by increased household energy costs that pushed the annual consumer price growth to its highest since March. The Consumer Prices Index increased by 2.9% compared to the same month last year, up from 2.6% in June. On a monthly basis, prices rose 0.3%, contrasting with a 0.1% increase in July 2022. The Office for National Statistics indicated that housing and household services contributed most significantly to the annual inflation change.
The broader CPIH measure of inflation grew to 3.1% in July from 2.8% in June. CPIH accounts for costs linked to owner-occupied housing and Council Tax. Inflation for housing and household services surged to 4.1%, up from 2.7% in June. During July, gas prices increased by 14.7% after declining 7.2% in the same month last year. Electricity costs also rose by 3.6%, reversing a 3.8% decline recorded in July 2025.
These increases followed a 13% rise in the household energy price cap for July through September. Ofgem stated that this adjustment resulted in a £221 rise in the annual cost for a typical dual-fuel household paying by direct debit. Under the previous typical-consumption benchmark, the annual cost reached £1,862. Elevated wholesale gas prices played a role in the cap’s increase. The adjustments in regulated energy prices directly impacted the July inflation figures as households faced higher gas and electricity charges.
Household expenses drive July’s inflation increase
In addition to energy costs, several other consumer sectors experienced stronger annual price growth in July. Prices for furniture and household goods increased by 1.0% from a year earlier after a 0.2% decline in June. Inflation for clothing and footwear rose to 0.5% from negative 0.5%. Conversely, food and non-alcoholic beverage inflation decreased to 1.3%, its lowest since September 2021, limiting some of the upward pressure on overall consumer prices.
Transport costs contributed the most to the downward adjustment in the annual inflation rate. Transport inflation slowed to 3.6% in July from 5.7% in June. During the month, diesel prices dropped by 8.8 pence per litre to an average of 167.6 pence, while petrol prices fell by 3.1 pence to 152.2 pence per litre. The annual inflation for motor fuels decreased to 15.5% from 21.3%. Airfares increased by 11.7% between June and July, but this was below the 30.2% rise recorded a year earlier.
Core inflation remains stable as service sector inflation eases
The core CPI inflation rate stayed at 2.6% in July, unchanged from June. This 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 overall CPI rate remains 0.9 percentage points above the UK’s 2% inflation target. The data indicates that energy-driven price increases primarily fueled July’s acceleration, with many underlying inflation indicators only changing modestly during the month.
CPIH services inflation held steady at 3.6%, while core CPIH inflation edged up to 2.9% from 2.8%. The largest contribution to CPIH inflation continued to come from housing and household services. Lower transport inflation partially offset some of the rise caused by household energy costs. Food prices also contributed less to inflation pressures than previously. Overall, the July figures reveal a clear divergence across major categories, with gas and electricity prices lifting headline inflation while transport and food costs exerted some restraint on the overall increase.