- UK Consumer Prices Index (CPI) inflation rose by 2.9% in the 12 months to July 2026.
- CPI inflation rose by 2.6% in the 12 months to June 2026, down from 2.8% in May and April 2026.
- Ratesetters at the Bank of England will be watching the July data closely to inform their next decision on UK interest rates.
| UK inflation forecast | What is inflation? | When will interest rates fall further? | CPI release dates | MPC meeting dates |
Good afternoon and welcome to our live coverage ahead of the Office for National Statistics (ONS) releasing its latest inflation data tomorrow (19 August).
The war in Iran had raised fears inflation would rise, but it has trended downwards recently since March 2026. What can be expected from the July data?
Stay with us as we bring you rolling commentary about what to expect, as well as reaction and analysis after the data is published.
What is the current rate of inflation?
The Consumer Prices Index (CPI) measure of inflation rose by 2.6% in the 12 months to June 2026, according to the latest available data from the Office for National Statistics.
This was a drop from 2.8% in the 12 months to May 2026.
While the annualised CPI inflation rate fell in June, this doesn’t mean prices were lower – simply that they rose at a slower rate than over the 12 months to May.
What are the predictions for the July inflation data?
Research firm Pantheon Macroeconomics believes CPI inflation will rise by 2.9% in July, in part because of a rise in domestic energy bills.
The Ofgem price cap rose by 13% on 1 July, seeing the average annual bill rise to £1,862 for a household on a dual-fuel tariff paying by direct debit.
Robert Wood, chief UK economist at Pantheon Macroeconomics, said the firm expected services inflation to slow to 3.4% in July, from 3.6% in June.
“Lower services inflation partly offsets the inflation boost from energy, as well as an uptick in goods inflation,” said Wood. “Lower services inflation is likely to be driven by temporary factors that will unwind over the summer.”
Economists at Deutsche Bank UK also believe inflation will read 2.9%, with core CPI, which strips out food and energy prices, to come in at 2.5%, down from 2.6% in June.
Food price rises slow
UK grocery inflation slowed to 2.1% in the four weeks to 9 August 2026, down from 2.6% in the four weeks to July 12 2026, according to the latest report from market researcher Worldpanel by Numerator.
It means food price inflation is at its lowest rate since October 2024 and prices have slowed for the fifth consecutive month.
The cost of food in the UK has fallen in recent weeks, according to market research firm Worldpanel by Numerator
When will the ONS release July’s inflation data?
The Office for National Statistics will release the inflation data at 7am tomorrow (19 August).
Key macroeconomic data like this was previously released at 9.30am, but the earlier release time was trialled then kept permanent during the Covid-19 pandemic.
The ONS says the earlier publishing time “increases the visibility and timely explanation” of its statistics through the media.
What does the Consumer Prices Index track?
The Consumer Prices Index is just one index that tracks the rate of price rises over a period of time.
Two other indexes are the Retail Prices Index (RPI) and the Consumer Prices Index including owner occupiers’ housing costs (CPIH).
The CPI tracks price changes across a basket of roughly 760 goods and services.
This basket is updated once a year to keep up with consumer trends. In 2026, houmous and WiFi light bulbs were added while premium bottled lager and Euro Tunnel fares were ditched.
The basket of goods and services is designed to reflect what the average consumer buys and uses in day-to-day life.
Houmous was added to the CPI basket of goods in 2026
Olive oil surges in price by 116% in last five years
Not everything inflates in price at the same rate – your personal inflation rate can be much higher or lower depending on what services you use and what products you consume.
For example, the price of olive oil has risen 116% over the last five years, according to analysis by investment platform AJ Bell.
Gas, meanwhile, has increased in price by 63% over the last half decade. Car insurance? Up 72% since 2021.
Laura Suter, director of personal finance at AJ Bell, said: “This week’s inflation figures will show whether the recent easing in price rises is continuing, but for households the bigger issue is that many everyday costs remain painfully higher than they were before the cost-of-living crisis began back in 2021.
“Even if the headline rate of inflation has cooled from its peak, five years of cumulative price rises have left a lasting mark on family budgets: from the weekly shop to energy bills, insurance and vet costs.”
Where has inflation been?
A quick look at a graph of where CPI inflation has been over the last few years and you’ll see it has been slowing from a peak of 11.1% in October 2022.
Inflation soared in 2022 due, in part, to rising energy and fuel prices following Russia’s invasion of Ukraine, but also because of a surge in demand for goods as economies across the world emerged from the Covid-19 pandemic.
CPI inflation steadily fell from 2022 and was at its lowest in September 2024 (1.7%).
It then began rising, reaching 3.8% in the summer of 2025, before slowing to 2.6% in June 2026.
What is inflation and why is it so important?
Inflation is a measure of how much the price of something has risen over a specific time period.
For example, if you bought something for £2 and it was worth £2.20 a year later, the rate of inflation will have been 10%.
Why inflation is so important is because it essentially erodes the value of your money in real-terms.
If you had £10,000 sitting in a bank account paying no interest, added no more and had £10,000 in there a year later, that £10,000 would effectively be worth less than before because you can buy less with it.
When it comes to saving and investing, this is why inflation should be a strong consideration for you as unless your interest rate is paying more than the rate of inflation, you’re losing money in real-terms.
What is the highest rate of inflation seen in the UK since 1970?
Inflationary highs of 11.1% in 2022 might seem extreme, but the UK economy has seen worse over the last 55 years.
CPI inflation hit 24.5% in the 12 months to August 1975, according to data from the ONS, staying in double-digits until December 1977.
Inflation during this period rose significantly, in part, because of surging oil, industrial material and metal prices and wage growth.
We’re going to end our coverage for today, but join us again first thing tomorrow when we’ll bring you live coverage of the ONS data release and reaction and analysis on what it means for you.
UK inflation figures for July due to be released soon
Good morning and welcome back to our UK inflation live report. The Office for National Statistics will release the latest inflation figures shortly. Stick with us for the latest news.
BREAKING: UK inflation rate rises by 2.9%
UK inflation, as measured by the Consumer Prices Index (CPI) rose by 2.9% in the year to July 2026, up from 2.6% in June.
It's the first time the 12-month rate of CPI has increased since March 2026.
On a monthly basis, CPI rose by 0.3% in July 2026, up from 0.1% in July 2025.
Chancellor responds to UK inflation rise
Chancellor John Healey has responded to the increase, which was in line with expert forecasts.
He said: "Iran war inflation continues to impact prices here at home, but Britain's economy is resilient.
"We have cut VAT on electricity bills and capped bus fares at £2 - to give breathing space to those feeling the strain.
“There is more to do to restore hope and build a stronger economy where prosperity is shared more fairly across Britain.“
What drove the inflation rise?
Housing and household services, particularly gas and electricity, drove July’s CPI annual inflation rise. Ofgem's energy price cap rose by 13% on 1 July.
Transport partially offset the increase. This was largely because of a fall in motor costs, particularly the price of diesel.
Core CPI remains unchanged
Core CPI (excluding energy, food, alcohol and tobacco) rose by 2.6% in the 12 months to July 2026, unchanged from June. The CPI goods annual rate increased to 2.2% from 1.7%, but the CPI services annual rate slowed to 3.4% from 3.6%.
Meanwhile, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.1% in the 12 months to July 2026, up from 2.8%. On a monthly basis, CPIH rose by 0.3% in July 2026, having been little changed in July 2025.
Core CPIH (CPIH excluding energy, food, alcohol and tobacco) rose by 2.9% in the 12 months to July 2026, up from 2.8% in the previous month.
BREAKING: Energy bills forecast to hit three-year high from October
Ofgem’s energy price cap is expected to rise by 4% in October, according to the final forecast by consultancy Cornwall Insight. On a unit for unit basis, this would mean bills would hit their highest level since July 2023, the firm said.
The rise is despite new prime minister Andy Burnham cutting VAT from household energy bills from October.
The expected rise is being driven by the ongoing uncertainty over the US-Iran conflict, with wholesale prices for the upcoming winter having climbed to their highest level in nearly four years. It’s compounded by the ongoing heatwave across Europe, which has increased gas demand for power generation to meet air conditioning and cooling demand.
Under Ofgem’s new definition of a typical consumer, which was introduced in July 2026, the annual price cap for a typical dual-fuel customer paying by direct debit is expected to rise to £1,729 – up from the current £1,663. Under the previous definition, the annual cap is expected to increase to £1,941, from the current £1,862.
Mel Stride - Labour “mismanagement” has left economy unprepared for global shocks
The shadow chancellor, Mel Stride, reacting to the latest inflation figures, has criticised the government’s “mismanagement” of the economy, which has left it “unprepared for global shocks”.
“Price rises are accelerating once again under Labour. We left inflation bang on the 2% target, now it has been above that level for 22 months in a row,” Stride said.
He added: “It is ordinary people who are left paying the price.”
The shadow chancellor said ordinary people have been left "paying the price" for the government's mismanagement of the economy
How does the UK’s rate of inflation compare to other countries?
UK CPI inflation in July was higher than both France’s (2.4%) and Germany’s (2.8%).
There’s no readily available data for the EU for July, although in the 12 months to June 2026, inflation read 2.9% across the EU27.
A quick recap
If you’re just joining us, the key takeaway from this morning is that the Consumer Prices Index measure of inflation rose to 2.9% in the 12 months to July, up from 2.6% in June.
One of the main upward pressures on prices was a rise in the price of gas and electricity.
The largest downward pressure came from a fall in prices across the transport sector.
A closer look at the figures
CPI inflation rose in the 12 months to July 2026, in part due to surging gas prices, but rises across other sectors also caused the headline figure to tick up.
The annual rate for furniture and household goods rose by 1% in the 12 months to July, compared to a fall of 0.2% in the 12 months to June.
Clothing and footwear prices rose by 0.5% in the year to July, versus a fall of 0.5% in the 12 months to June.
These increases were partially offset by a fall in transport inflation, which rose by 3.6% in the 12 months to July, down from 5.7% in June and food and non-alcoholic drinks, which rose by 1.3% in the 12 months to July, down from 1.7% in June.
Chief economist - Inflation could top 3.5% this year
July’s inflationary uptick is “unlikely to be a one-off”, according to Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales (ICAEW).
Thiru said food prices could rise over the coming months due to current drought conditions and energy prices may also increase further.
This raised the prospect of inflation “topping 3.5%” later this year, particularly if disruption in the Strait of Hormuz, a key waterway through which oil is transported, persists, he added.
He continued: “Rising inflation is likely to become the biggest threat to UK growth in the coming months as it eats into household budgets by increasing the cost of essentials, while also raising government borrowing costs and eroding the chancellor’s fiscal headroom ahead of October’s Budget.”
What can households do about rising energy prices?
With the latest predictions from analysts Cornwall Insights forecasting the Ofgem price cap will rise by 4% in October, what should you do?
Richard Neudegg, director of regulation at price comparison website Uswitch, said now could be a good time to fix your next energy deal.
Neudegg said: “The best fixed deals on the market right now undercut this [October] prediction by around 12%, with the cheapest priced at £1,522 for a typical home.
“Don’t suffer higher winter bills when you don’t have to – a decent fixed tariff beats these rates and protects you from further price rises. Every week spent on a standard tariff is another week paying higher rates than you need to.”
It is worth noting though, fixing an energy deal means you’re locked in to that rate for a specified period, so you could miss out on a drop in the price cap.
One in five savings accounts pay less than inflation
Four out of five savings accounts on the market currently beat inflation, according to analysis from data firm Moneyfactscompare, including 219 easy-access accounts and 866 fixed-rate bonds.
However, this means one in five savings accounts aren't beating inflation. If you have one of these accounts, it’s worth ditching and switching to a higher-paying one.
Caitlyn Eastell, personal finance analyst at Moneyfactscompare, said: “For savers, beating inflation is the difference between simply earning interest and increasing the spending power of their money. While a balance can be growing on paper, it could be shrinking in value if the savings rate fails to keep pace with rising prices.”
Savers with savings accounts paying low rates of interest should switch to another deal now
What could happen in the mortgage market?
Rising inflation puts the Bank of England’s Monetary Policy Committee under pressure to increase interest rates to encourage people to save more and spend less.
This, in turn, is designed to slow inflation, but it does mean banks and building societies are charged more to borrow money from the Bank of England.
Banks and building societies tend to pass these higher costs onto consumers in the form of higher mortgage rates.
Changes in the base rate have a more immediate impact on tracker and standard variable rate mortgages, whereas fixed-rate mortgages are usually more affected by swap rates and expectations of what lenders believe interest rates will be in the future.
What does today's inflation data mean for the mortgage market? Not a massive amount, according to David Hollingworth, associate director at broker L&C Mortgages.
He said this was because markets were expecting inflation to rise in July and so fixed-rate mortgages had already been priced in to reflect this.
However, he warned the market was still volatile and mortgage rates could rise in the future.
Hollingworth said: “Anything that would cause markets to fear a more severe hike would have implications for mortgage rates. Stubborn underlying price pressures would put more pressure on the Bank of England to lift interest rates.”
What do you think inflation will be in August?
With gas and electricity prices on the rise for now, what do you think the August CPI inflation figure will be?
When will the next inflation data be published?
The ONS publishes inflation data monthly, for the preceding month – that’s why the data released today covers the month of July.
The ONS will release inflation data for August on 16 September.
You can find out when the ONS is set to release inflation, GDP and wages data on its website.
Goodbye for now
We're going to end our inflation coverage here for today. Thank you for following, and visit our homepage for all the latest personal finance and investing news.