LONDON / RankWire.AI / – UK inflation accelerated in July as the surge in household energy expenses contributed to the highest annual consumer price increase since March. The Consumer Prices Index increased by 2.9% compared to the same month last year, up from 2.6% in June. Prices also grew by 0.3% compared to June, contrasting with a 0.1% monthly rise in July 2022. The Office for National Statistics reported that housing and household services were the main drivers behind the upward shift in annual inflation.
The broader CPIH inflation measure climbed to 3.1% in July from 2.8% the previous month. CPIH encompasses costs related to owner-occupied housing and Council Tax. Inflation in housing and household services saw a significant increase to 4.1%, up from 2.7% in June. Gas prices jumped 14.7% during July after a 7.2% decline in the same month last year. Electricity costs rose by 3.6%, reversing a 3.8% decrease recorded in July 2025.
This rise was driven by a 13% increase in the household energy price cap for July through September. Ofgem stated that the adjustment added £221 annually to the typical dual-fuel household paying by direct debit. Under the previous average consumption benchmark, the annual cost reached £1,862. The increase in wholesale gas prices contributed to the cap adjustment. These regulated energy price changes directly impacted July’s inflation data, as households faced higher gas and electricity bills.
Household Expenses Drive July’s Price Growth
Other consumer categories also experienced stronger annual price increases in July. Prices for furniture and household goods rose by 1.0% compared to the previous year, after a 0.2% decline in June. Clothing and footwear inflation increased to 0.5% from negative 0.5%. Conversely, food and non-alcoholic beverage inflation eased to 1.3%, the lowest since September 2021, helping to temper some of the overall upward pressure on consumer prices.
Transport contributed the most to the decrease in the annual inflation rate. Transport inflation slowed to 3.6% in July from 5.7% in June. Diesel prices fell by 8.8 pence per litre to an average of 167.6 pence, while petrol prices decreased by 3.1 pence to 152.2 pence per litre. The annual inflation rate for motor fuels eased to 15.5% from 21.3%. Airfares increased by 11.7% between June and July, below the 30.2% rise seen a year earlier.
Core Inflation Holds Steady as Service Sector Eases
Core CPI inflation remained unchanged at 2.6% in July, matching June’s figure. 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 overall CPI rate was 0.9 percentage points above the Bank of England’s 2% inflation target. The data indicated that energy price increases were primarily responsible for July’s acceleration, with many other underlying inflation indicators experiencing only modest shifts during the month.
CPIH services inflation held at 3.6%, while core CPIH nudged up to 2.9% from 2.8%. Housing and household services continued to be the biggest contributors to CPIH inflation. A slowdown in transport inflation helped offset some of the inflationary impact from household energy costs. Food prices also contributed less pressure compared to previous months. The July report clearly showed a divergence across key categories, with gas and electricity prices driving overall inflation higher, while transport and food costs restrained the increase.