UK inflation rose to 2.9% in July, adding to pressure on businesses and consumers as higher energy costs fed through into the wider economy.<\/p>\n
The latest Consumer Prices Index figure, published by the Office for National Statistics, compares with 2.6% in June and was in line with economists\u2019 expectations.<\/p>\n
The increase was attributed to higher household energy costs, following a 13% rise in the Ofgem price cap from 1 July. The change added around \u00a3221 a year to the typical household energy bill.<\/p>\n
For businesses, the renewed inflationary pressure comes as the wider economy faces uncertainty over energy prices, employment and interest rates.<\/p>\n
The Bank of England is now weighing up its next move on borrowing costs, with persistent inflation potentially increasing pressure for interest rates to rise. However, signs of weakening in the labour market could make the central bank more cautious.<\/p>\n
Recent data has shown falling job vacancies and slower private sector pay growth, suggesting businesses are becoming more cautious over recruitment and wage increases.<\/p>\n
The latest inflation figures also mark a reversal of the progress made towards the Bank of England’s 2% target. Inflation had fallen from a peak of 3.8% last year and was expected to move closer to target before renewed disruption to energy markets.<\/p>\n
The conflict in Iran, alongside extreme weather affecting food production, has increased concerns over the potential for further price rises.<\/p>\n
The Bank of England warned last month that a worst-case escalation in the Middle East conflict could push UK inflation as high as 4.5% by the middle of 2027.<\/p>\n
The rise comes against a relatively resilient economic backdrop, with the UK recording the fastest growth among G7 economies during the first half of 2026.<\/p>\n
However, higher energy and input costs could create further challenges for companies already managing tight margins, while weaker employment growth may weigh on consumer demand.<\/p>\n
The government has also announced measures aimed at easing household costs, including a planned VAT cut on electricity bills from October.<\/p>\n","protected":false},"excerpt":{"rendered":"
For businesses, the latest squeeze adds another layer of uncertainty as energy costs, hiring and interest rates all remain unpredictable<\/p>\n","protected":false},"author":266702,"featured_media":2114037,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"coauthors":[127717],"class_list":["post-2114035","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-news","tag-featured-story","tag-national"],"yoast_head":"\n