ONS · Consumer Price Inflation, UK · July 2026 · Released 19 August 2026 · Damian Pudner
Inflation jumps to 2.9% as the energy bill lands — but the core barely moved
CPI rose to 2.9% in the 12 months to July, up from 2.6% in June, its first increase since March. The reason is hardly mysterious. The Ofgem energy price cap reset pushed gas prices up 14.7% in July alone, the biggest monthly rise since October 2022. Underneath that, core CPI held at 2.6% and services inflation eased to 3.4% — though goods inflation rose half a point, which is what kept the core from falling. Cheaper diesel pulled the other way.
2.9%
CPI — 12m to July 2026
Up from 2.6% in June
2.6%
Core CPI — 12m to July
Unchanged from June
3.4%
Services CPI — 12m to July
Down from 3.6% in June
Key Points
CPI rose to 2.9% in the 12 months to July 2026, up from 2.6% in June, the first increase since March 2026. CPIH rose to 3.1%, up from 2.8%, also its first rise since March. On the month, CPI rose 0.3% and CPIH rose 0.3%.
Energy did most of the damage. Housing and household services inflation jumped to 4.6% from 1.2% in June and made the largest upward contribution to the CPI increase. Gas prices rose 14.7% between June and July, the biggest monthly increase since October 2022, after the Ofgem Q3 price-cap reset added £221 to the typical annual dual-fuel direct-debit bill, taking it to £1,862. Gas prices are now at their highest level since March 2024.
The cap rise traces back to the conflict. Ofgem's 12-week assessment window for the July-to-September cap ran from 18 February to 18 May 2026 — the first assessment period affected by the outbreak of the conflict in the Middle East.
Transport eased to 3.6% from 5.7%, the largest offsetting downward contribution. Diesel fell 8.8 pence per litre between June and July to 167.6p/litre; petrol fell 3.1p to 152.2p/litre. Overall motor fuel inflation eased to 15.5% from 21.3%.
Food and non-alcoholic beverages fell to 1.3%, from 1.7% in June — the lowest rate since September 2021, when it was 0.8%.
Furniture and clothing moved back into positive inflation. Furniture and household goods rose to 1.0%, from −0.2%, while clothing and footwear rose to 0.5%, from −0.5%. Their monthly July price falls were the smallest since 1989 and 2020 respectively.
Core CPI was unchanged at 2.6% — but not because nothing moved. Goods inflation rose from 1.7% to 2.2%, offsetting the fall in services from 3.6% to 3.4%. Core CPIH rose a tenth to 2.9%, its first rise since February 2026; CPIH services inflation was unchanged at 3.6%.
Air fares split sharply in July: European routes fell 4.3% on the month while long-haul rose 31.7%, against a 20.9% rise a year earlier. The ONS links this, with appropriately hedged language, to the Middle East conflict's effect on airline capacity and rerouting.
Internationally, UK CPI of 2.9% was above the flash estimates for France (2.4%) and Germany (2.8%) in July 2026. RPI was 3.2%. The OOH costs contribution to CPIH rose to 0.65 percentage points — a second consecutive rise, following 16 consecutive falls.
CPI and CPIH 12-month inflation rate
UK, July 2025 to July 2026 · 2% CPI target shown; CPIH is not the target measure
Source: ONS, Consumer price inflation, UK: July 2026, Table 1. Monthly series, July 2025 to July 2026.
CPI 12-month rate by division
Division
June 2026
July 2026
Direction
Housing & household services
1.2%
4.6%
▲
Clothing & footwear
−0.5%
0.5%
▲
Furniture & household goods
−0.2%
1.0%
▲
Health
2.5%
3.7%
▲
Alcohol & tobacco
2.1%
2.5%
▲
Education
5.1%
5.1%
—
Misc. goods & services
2.7%
2.7%
—
Communication
5.2%
5.0%
▼
Recreation & culture
1.7%
1.4%
▼
Restaurants & hotels
4.4%
4.0%
▼
Food & non-alc. beverages
1.7%
1.3%
▼
Transport
5.7%
3.6%
▼
CPI all items
2.6%
2.9%
▲
Source: ONS, Consumer price inflation, UK: July 2026, Table 3. Five divisions recorded higher annual rates, five lower and two were unchanged. On a contributions basis, housing and household services contributed 0.59 percentage points to July's annual CPI rate and made the largest upward contribution to the change from June; transport made the largest downward contribution. The corresponding CPIH housing and household services division rose to 4.1% (from 2.7%), contributing 1.26 percentage points to the CPIH rate.
Commentary
July breaks the recent disinflation run, but there is less here than the headline suggests. CPI rose to 2.9% and CPIH to 3.1%, both up for the first time since March. The culprit is obvious: the Ofgem price-cap reset pushed gas prices up 14.7% in a single month and dragged housing costs sharply higher. That is a real squeeze on household budgets, but it is not evidence by itself that Britain's underlying inflation problem has suddenly worsened.
The underlying numbers are calmer, though not uniformly so. Core CPI stayed at 2.6% and services inflation fell from 3.6% to 3.4%. But that stability is doing more work than it appears: goods inflation rose from 1.7% to 2.2% over the same month, and it is that rise which offset the easing in services to leave core unchanged. Energy is the largest part of the goods move. The honest reading is that the core held rather than that nothing happened beneath it.
Transport pulled inflation the other way. Diesel fell 8.8p a litre and motor-fuel inflation dropped from 21.3% to 15.5%. Air fares were more erratic: European routes became cheaper while long-haul fares jumped 31.7% in July, with the ONS pointing cautiously to reduced capacity and rerouting linked to the Middle East conflict. That is precisely why one month's headline should not be over-interpreted in either direction.
Why It Matters
A 2.9% headline will inevitably be presented as inflation surging again. The underlying data tell a less dramatic story. July's increase is heavily concentrated in energy, core inflation was unchanged and services inflation fell.
For the Bank of England, this argues against overreacting. Its July Monetary Policy Report already had the near-term CPI projection rising to 3.2% in October and November 2026 before easing back, as the indirect effects of higher energy costs feed through food and other goods. July's 2.9% is broadly on that path, not an inflation shock arriving from nowhere.
The Committee itself is less relaxed than that reading implies. On 29 July it voted 6–3 to hold, with Megan Greene, Catherine Mann and Huw Pill all preferring a rise to 4%. No member voted to cut. The minutes record that the MPC "judged that the risk of strong inflationary pressures was greater than the risk of weak inflationary pressures", and that risks to the inflation outlook are "tilted to the upside". GBTT still expects a hold at 3.75% on 17 September.
GBTT continues to expect the next move in Bank Rate to be down, with a 25-basis-point cut by year-end our central case. July's inflation data does not change that view — but readers should weigh it against a committee where three of nine members voted to hike three weeks ago, and none voted to cut.
What To Watch
Households
The £221 increase in Ofgem's typical annual dual-fuel direct-debit bill is a genuine hit to disposable income. Cheaper petrol and diesel provide some relief, but energy costs reach almost every household.
The Bank
September still looks like a hold. The more important question is whether core and services inflation remain subdued as the energy shock works through — and whether the goods rate keeps climbing. The MPC has said it is watching for second-round effects in pay and price-setting, with 2027 pay settlements the key evidence still to come.
The Treasury
September CPI matters for the Treasury too. It remains the inflation reference for the uprating of many benefits next April. A higher September number means a higher welfare bill, landing just weeks before the Budget.
Next Release: Consumer Price Inflation, UK: August 2026 — 16 September 2026, 7:00am.
July breaks the recent disinflation run, but there is less here than the headline suggests. CPI rose to 2.9% and CPIH to 3.1%, both up for the first time since March. The culprit is obvious: the Ofgem price-cap reset pushed gas prices up 14.7% in a single month and dragged housing costs sharply higher. That is a real squeeze on household budgets, but it is not evidence by itself that Britain's underlying inflation problem has suddenly worsened.
The underlying numbers are calmer, though not uniformly so. Core CPI stayed at 2.6% and services inflation fell from 3.6% to 3.4%. But that stability is doing more work than it appears: goods inflation rose from 1.7% to 2.2% over the same month, and it is that rise which offset the easing in services to leave core unchanged. Energy is the largest part of the goods move. The honest reading is that the core held rather than that nothing happened beneath it.
Transport pulled inflation the other way. Diesel fell 8.8p a litre and motor-fuel inflation dropped from 21.3% to 15.5%. Air fares were more erratic: European routes became cheaper while long-haul fares jumped 31.7% in July, with the ONS pointing cautiously to reduced capacity and rerouting linked to the Middle East conflict. That is precisely why one month's headline should not be over-interpreted in either direction.