LONDON / RankWire.AI / – UK inflation picked up pace in July, driven by higher household energy costs. Consumer prices increased at their fastest annual rate since March. The Consumer Prices Index rose 2.9% compared to the previous year, up from 2.6% in June. Prices also grew by 0.3% from June to July. Last year in July, the monthly rise was only 0.1%. The Office for National Statistics noted that housing and household services contributed most significantly to the annual inflation increase.
The broader CPIH inflation measure went up to 3.1% in July from 2.8% a month earlier. CPIH covers costs related to owner-occupied housing and Council Tax. Inflation for housing and household services rose sharply to 4.1%, from 2.7% in June. Gas prices jumped 14.7% during July, after falling 7.2% in the same month last year. Electricity prices increased by 3.6%, reversing a 3.8% decline recorded in July 2025.
These increases followed a 13% rise in the household energy price cap for July through September. Ofgem stated that this change increased the annual cost for a typical dual-fuel household paying by direct debit by £221. Under the previous typical consumption benchmark, the annual cost reached £1,862. Higher wholesale gas costs played a role in the cap increase. The change in regulated energy prices directly impacted July’s inflation figures, as households faced higher gas and electricity charges.
Household expenses drive July’s price hike
Other consumer categories also showed stronger annual price growth in July. Furniture and household goods prices rose 1.0% from a year earlier after falling 0.2% in June. Inflation for clothing and footwear increased to 0.5% from negative 0.5%. Food and non-alcoholic beverage inflation eased to 1.3%. This was the lowest annual rate since September 2021 and helped limit some of the overall upward pressure on consumer prices.
Transport contributed most to the decrease in annual inflation. Transport inflation slowed to 3.6% in July from 5.7% in June. Diesel prices dropped 8.8 pence per litre to an average of 167.6 pence. Petrol prices fell 3.1 pence to 152.2 pence per litre. Annual motor-fuel inflation decreased to 15.5% from 21.3%. Airfares increased 11.7% from June to July, lower than the 30.2% rise a year earlier.
Core inflation remains steady amid easing services costs
Core CPI inflation stayed at 2.6% in July, unchanged from June. It excludes energy, food, alcohol, and tobacco. Goods inflation increased to 2.2% from 1.7%, while services inflation fell to 3.4% from 3.6%. The headline CPI rate remains 0.9 percentage points above the UK’s 2% inflation target. The data shows that energy-driven increases caused much of July’s acceleration. Several underlying inflation measures changed only slightly during the month.
CPIH services inflation stayed at 3.6%, and 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 impact of higher household energy costs. Food prices also exerted less upward pressure than before. The July report highlights a clear split across major categories. Gas and electricity pushed headline inflation higher, while transport and food prices restrained the overall increase.