Jump in energy bills drives UK inflation to highest rate for four months

Higher energy bills drove UK inflation up to 2.9% in the 12 months to July, the latest figures show.

Energy costs rose on 1 July after regulator Ofgem increased the price cap on household gas and electricity bills by 13%, which added £221 a year to the typical household's bill.

The Office for National Statistics (ONS) said the increase to the energy price cap was driven by "the largest rise in gas prices for almost four years".

It is highest rate of inflation since March, but some price rises have slowed: food inflation, at 1.3%, is at its lowest rate for close to five years.

ONS prices director Mike Hardie said furniture prices, which fell by less than usual for that time of year, added to the upward pressure on inflation, and said clothing was also not being discounted as much.

Chancellor John Healey said the Iran war was continuing to affect prices in the UK, but insisted Britain's economy was resilient.

"We have cut VAT on electricity bills and capped bus fares at £2 - to give breathing space to those feeling the strain," he said.

"There is more to do to restore hope and build a stronger economy where prosperity is shared more fairly across Britain."

KPMG's chief economist Yael Selfin said July marked the start of a gradual rise in inflation, though she said Wednesday's figure was not enough to spur change in the Bank of England's interest-rate setting decisions.

But Selfin added that energy-related costs were expected to push inflation higher over the coming months to a peak of about 3.5%.

Shadow chancellor Mel Stride said the country was unprepared for global shocks due to Labour's "mismanagement", leaving ordinary people "paying the price".

Penny Keevil says the cost of living crisis is here to stay. She founded crisis support centre Second Chance Medway, which runs a discounted food pantry two days a week, where she now sees not only people on benefits, but working people too.

"The need for affordable food now reaches across every part of the community," she said.

"Energy bills are still far too high and wages and incomes aren't keeping up".