UK Inflation Rises to 2.9% in July as Energy Bills Push Up Prices
CPI inflation rose to 2.9% in the 12 months to July 2026, up from 2.6% in June, as the Ofgem price cap lifted gas prices by 14.7% in the month. Here is what the figures mean for UK founders.
By Entrepreneur Group · Published · Updated
UK consumer price inflation rose to 2.9% in the 12 months to July 2026, up from 2.6% in June, according to the Office for National Statistics. Household energy was the biggest driver: gas prices rose 14.7% in the month, mainly because of the change in Ofgem's price cap, and electricity rose 3.6%.
The wider CPIH measure, which includes owner occupiers' housing costs, rose to 3.1% from 2.8%. Prices rose 0.3% between June and July on both measures.
What pushed inflation up and what held it back
The ONS identifies housing and household services as the largest upward contributor. Its annual rate rose from 2.7% to 4.1%, adding 0.59 percentage points to CPI inflation.
Transport pulled the other way. Its annual rate fell from 5.7% to 3.6% as motor fuel inflation slowed from 21.3% to 15.5% and diesel fell 8.8p a litre during the month. Air fares still rose 11.7% in the month, driven by long-haul routes.
Other figures that matter for businesses:
- Core CPI, which excludes energy, food, alcohol and tobacco, was unchanged at 2.6%.
- Services inflation on the CPI measure fell from 3.6% to 3.4%.
- Goods inflation rose from 1.7% to 2.2%.
- Food and non-alcoholic drinks inflation eased from 1.7% to 1.3%.
The Bank of England's view
The figures came three weeks after the Bank of England held Bank Rate at 3.75% on 30 July by a 6–3 vote, with three members preferring a rise to 4%. In its July summary, the Monetary Policy Committee said inflation "is expected to rise later this year as the effects of higher energy prices continue to pass through", and linked the volatility in energy prices to events in the Middle East. It judged the risks to inflation to be "tilted to the upside".
July's rise is consistent with that warning. Core inflation and services inflation did not rise, which suggests the increase was concentrated in energy rather than spreading across the economy, at least in this month's data.
What it means for your business
This section is editorial guidance, not financial advice.
- Energy contracts. If you are on a business energy contract rather than the domestic price cap, your costs follow your own tariff, not Ofgem's cap. Check renewal dates now, before winter.
- Pricing. With core inflation steady at 2.6%, customers may resist large price rises. Review margins product by product rather than applying one blanket increase.
- Borrowing. Variable-rate borrowing follows the terms of your agreement. With the Bank warning of upside risks, stress-test your cash flow against a higher rate as well as the current 3.75%.
- Wage talks. Staff will see headline inflation in the news. Be clear about what you can afford and when you will next review pay.
The next CPI release, covering August, is due on 16 September 2026.
Frequently asked questions
What was UK inflation in July 2026?
CPI inflation was 2.9% in the 12 months to July 2026, up from 2.6% in June. The CPIH measure was 3.1%, up from 2.8%.
Why did inflation rise in July 2026?
The largest upward contribution came from household energy. Gas prices rose 14.7% in the month, mainly because of the Ofgem price cap change, and electricity rose 3.6%. Lower motor fuel inflation partly offset this.
What is core inflation in the UK?
Core CPI excludes energy, food, alcohol and tobacco. It was 2.6% in the 12 months to July 2026, unchanged from June.
Sources
- ONS: Consumer price inflation, UK: July 2026 (19 August 2026) (reviewed 27 October 2026)
- Bank of England: Monetary Policy Summary, July 2026 (reviewed 27 October 2026)