UK Inflation Climbs to 2.9% Amid Energy Price Surge
Gas price hikes and energy cap lift drive cost-of-living squeeze, with global conflicts and extreme weather threatening further increases.
Sarah Connor
UK inflation rose to 2.9% in the 12 months to July.
The Office for National Statistics confirmed a significant increase; Mike Hardie noted it marked the largest rise in gas prices in almost four years.
Other upward pressures included furniture prices falling by less than usual, alongside a smaller fall for clothing prices due to reduced discounting.
The average annual gas and electricity bill reportedly increased by £221, reaching £1,862, as crude oil prices climbed above 90 US dollars a barrel.
The Strait of Hormuz shipping route is understood to be closed, reportedly pushing energy prices higher.
The Iran war, including the US-Israel war on Iran, is said to have sent shock waves through global energy markets, triggering a renewed cost of living squeeze for British households.
Despite these escalating pressures, Threadneedle Street kept borrowing costs unchanged last month.
Andy Burnham announced measures to alleviate the strain, including cutting VAT to reduce consumer electricity bills by an average of £45 a year from October.
John Healey stated, "We have cut VAT on electricity bills and capped bus fares at £2 – to give breathing space to those feeling the strain."
We have cut VAT on electricity bills and capped bus fares at £2 – to give breathing space to those feeling the strain.
The government's Great British Summer Savings Scheme offers reduced prices on attractions and children's meals until September.
However, fears mount that the summer's heatwave could start putting pressure on food costs.
Producers claim that soaring temperatures and droughts across the UK and Europe are set to drive prices higher.
The Food and Drink Federation claims recent heatwaves are hitting fruit, vegetable, and grain supply, with crop shortages expected to feed into supermarket prices.
The fighting in the Middle East and extreme weather hitting food production worldwide have rekindled fears of a renewed inflation increase around the globe.
Experts claim that heatwaves, droughts, and the war involving Iran could push grocery prices back up.
The July Retail Price Index (RPI) rate is used to calculate next year's train fare increase.
John Healey claims the Government is taking action to help under-pressure households and the wider economy.
Healey added, "There is more to do to restore hope and build a stronger economy."
There is more to do to restore hope and build a stronger economy.