UK inflation rises to 2.9% as Iran war fuels living costs squeeze
Summary
UK inflation rose to 2.9% in July due to higher energy prices caused by the war involving Iran. This increase adds pressure on British households and the government as it considers ways to help people with living costs.Key Facts
- Inflation in the UK increased from 2.6% in June to 2.9% in July.
- The rise in inflation is linked to energy price shocks caused by the war involving Iran.
- Energy bills saw the largest summer rise in four years in July.
- The Bank of England may raise interest rates soon to control inflation.
- The UK job market showed some weakness, including fewer job vacancies and slower private sector pay growth.
- The UK economy grew faster than other G7 countries in the first half of 2026.
- The government plans to cut VAT on electricity to lower bills by about £45 yearly from October.
- The Bank of England warned inflation could reach 4.5% by mid-2027 if the war worsens.
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