New UK cost of living crisis looms with soaring energy bills forecast to lift inflation
Summary
British energy bills have risen sharply due to global instability, pushing UK inflation close to 3% in July, according to forecasts. This increase is causing financial strain for households and may lead the Bank of England to raise interest rates soon.Key Facts
- Inflation in the UK is expected to rise to about 2.9% in July, up from 2.6% in June.
- The rise is mainly due to a 13% increase in the energy price cap set by Ofgem, the UK energy regulator.
- Petrol and diesel prices have fallen slightly, which helps offset some inflation.
- The Iran war is causing instability in global energy markets, affecting UK prices.
- The Bank of England may raise interest rates starting September to control inflation.
- UK inflation had been expected to fall close to 2% before the Iran conflict.
- Prime Minister Andy Burnham announced measures like cutting VAT on electricity to reduce energy bills.
- The Bank forecasts inflation could reach 3.2% by year-end and potentially 4.5% by mid-2027 if global tensions worsen.
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