LONDON / RankWire.AI / – UK inflation accelerated in July as higher household energy costs pushed consumer prices to their strongest annual pace since March. The Consumer Prices Index rose 2.9% from a year earlier, compared with 2.6% in June. Prices increased 0.3% from the previous month. That compared with a 0.1% monthly rise in July last year. The Office for National Statistics said housing and household services made the biggest upward contribution to the annual inflation change.
The broader CPIH inflation measure increased to 3.1% in July from 2.8% a month earlier. CPIH includes costs linked to owner-occupied housing and Council Tax. Housing and household services inflation rose sharply to 4.1%, compared with 2.7% in June. Gas prices climbed 14.7% during July after falling 7.2% in the same month last year. Electricity prices increased 3.6%, reversing a 3.8% decline recorded in July 2025.
The increase followed a 13% rise in the household energy price cap for July through September. Ofgem said the change lifted the annual cost for a typical dual-fuel household paying by direct debit by £221. Under the previous typical-consumption benchmark, the annual figure reached £1,862. Higher wholesale gas costs had contributed to the cap increase. The change in regulated energy prices fed directly into the July inflation figures as households faced higher gas and electricity charges.
Household costs lead July price increase
Several other consumer categories also recorded stronger annual price growth in July. Furniture and household goods prices rose 1.0% from a year earlier after declining 0.2% in June. Clothing and footwear inflation increased to 0.5% from negative 0.5%. Food and non-alcoholic beverage inflation moved in the opposite direction, easing to 1.3%. That marked its lowest annual rate since September 2021 and limited some of the broader upward pressure on consumer prices.
Transport provided the largest downward contribution to the change in annual inflation. Transport inflation slowed to 3.6% in July from 5.7% in June. Diesel prices fell 8.8 pence per litre during the month to an average 167.6 pence. Petrol prices dropped 3.1 pence to 152.2 pence per litre. Annual motor-fuel inflation eased to 15.5% from 21.3%. Air fares rose 11.7% between June and July, below the 30.2% increase recorded a year earlier.
Core inflation steady as services ease
Core CPI inflation remained at 2.6% in July, unchanged from June. The core measure excludes energy, food, alcohol and tobacco. Goods inflation strengthened to 2.2% from 1.7%, while services inflation eased to 3.4% from 3.6%. The headline CPI rate stood 0.9 percentage points above the United Kingdom’s 2% inflation target. The figures showed that energy-related increases drove much of July’s acceleration, while several underlying inflation measures changed only modestly during the month.
CPIH services inflation remained at 3.6%, while core CPIH edged up to 2.9% from 2.8%. Housing and household services continued to make the largest contribution to CPIH inflation. Lower transport inflation helped offset some of the increase from household energy costs. Food prices also added less pressure than in previous periods. The July report therefore showed a clear split across major categories, with gas and electricity lifting headline inflation while transport and food restrained the overall rise.