UK inflation – live: Rise to 2.2% for the first time this year deals blow to interest rate cut next month

Commenting on today’s inflation data, which show a small rise in CPI inflation to 2.2 per cent, TUC General Secretary Paul Nowak said:

“The Conservatives failed to protect families from surging prices, rocketing interest rates, and a living standards crisis. But with a new approach the government can keep inflation low, ensure rates keep falling, and get wages rising.

“Inflation has been driven by problems like high energy prices, not by wages. The Bank of England should continue to ease pressures on families and businesses by bringing interest rates down.

“The government’s plan to boost workers’ rights can be a game changer, driving up productivity and making work pay. And if we invest in industry, including energy security with our own national supply, we can better control future inflation.”

Grant Fitzner, chief economist at the Office for National Statistics (ONS), said: “Inflation ticked up a little in July as although domestic energy costs fell, they fell by less than a year ago.

“This was partially offset by hotel costs, which fell in July after strong growth in June.”

Suren Thiru, Economics Director at the Institute of Chartered Accountants in England and Wales , said: “These figures suggest that the sweet spot for UK inflation has passed as the recent downward pressure on the headline rate from lower energy costs faded away in July.

“This increase signals the start of a period of moderately rising price pressures, with greater demand from a recovering economy and higher energy bills likely to keep inflation above the Bank of England’s 2 per cent target until next year.

“The notable slowdown in services inflation suggests that underlying price pressures are becoming less troublesome. The growing squeeze on wages from a subdued jobs market should help keep it on a firm downward trajectory.

“These figures mean a September rate cut is improbable and will likely lead to a definitive, possibly unanimous, vote among rate setters in favour of keep interest rates on hold.”

Shadow chancellor,Jeremy Hunt said:“Today’s figures show how important it is that the new Labour government follows the path of the previous Conservative government and focus on keeping inflation low.

“In government, we took the difficult decisions to reduce inflation from 11.1 per cent to the Bank of England’s target of 2.0 per cent – paving the way for the first interest rate cut in four years. However, there is clearly more to be done to keep inflation down.”

Simon French, head economist at Penmure Liberum, described the inflation data as encouraging and that the Bank of England would still likely cut interest rates again at the end of the year.

Most economists think the Bank is unlikely to cut rates again in September, but could still make additional cuts in rates before the end of the year.

Darren Jones, Chief Secretary to the Treasury, said: “The new government is under no illusion as to the scale of the challenge we have inherited, with many families still struggling with the cost of living.

“That is why we are taking the tough decisions now to fix the foundations of our economy so we can rebuild Britain and make every part of the country better off.”

The Office for National Statitics said the largest upward contribution to the monthly change in inflation rates came from housing and household services where prices of gas and electricity fell by less than they did last year.

The largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year.

Inflation has risen for the first time in 2024 – to 2.2 per cent – in new data which highlights the battle facing the Bank of England to keep prices in check.

Official figures to show that inflation rose back above the Bank of England’s 2% target in July, driven in part by holiday-related price rises for airfares and hotels.

Every month, the Office for National Statistics (ONS) reports the Consumer Prices Index (CPI) inflation figure, which measures the speed prices are rising year-on-year.

The rise in prices at the shopping tills in the year up to July will be considered as part of the overall inflation figure for the period, which will be revealed by the the Office for National Statistics this morning.

However, the British Retail Consortium (BRC)-NielsenIQ Shop Price Index has already released it own shop inflation data for July.

It showed shop price inflation remained unchanged in July at 0.2 per cent after months of slowing.

BRC chief executive Helen Dickinson said: “The 2023 declines in global food commodity prices continued to feed through, helping bring down food inflation rates over the first seven months of 2024.

“However this shows signs of reversing, suggesting renewed pressure on food prices in the future.”

The last figure for inflation – the rise in prices over time – showed it remained on the Bank of England’s target of 2 per cent in June.

However, this masked a wide variation in the rate for everyday items, with price rises easing for some products but accelerating for others.

One of the sharpest jumps was in the average cost of hotels and other accommodation services, which rose 9.9 per cent in the year to June, compared with an increase of 6.6 per cent in the 12 months to May.

Breakfast cereals also saw an acceleration in prices, up 3.5 per cent in June compared with a rise of 0.4 per cent in May.

By contrast, the rate of inflation eased for tea (up 6.8 per cent in the year to June compared with a jump of 9.8 per cent in May), train travel (up 3.3 per cent in June, up 6.3 per cent in May) and frozen vegetables (3.8 per cent June, 6.0 per cent May).