UK Inflation hits 3.8% in July, highest level of 2024

Britain’s inflation climbed faster than expected in July, reaching its highest point since the beginning of the year and intensifying pressure on the government and economy.

Figures released on Wednesday by the Office for National Statistics (ONS) showed that the Consumer Prices Index rose to 3.8 percent in July, up from 3.6 percent in June.

Analysts had predicted a slightly lower rise of 3.7 percent. The increase was largely driven by higher airfares and food costs.

The report comes as Britain’s economy performed better than anticipated in the second quarter, raising speculation that the Bank of England (BoE) may delay further interest rate cuts this year.

Reacting to the data, Finance Minister Rachel Reeves admitted that “there’s more to do to ease the cost of living,” signalling ongoing challenges for households.

The Labour-led government of Prime Minister Keir Starmer raised business taxes in April, coinciding with the start of a 10 percent baseline tariff on most UK goods imposed by US President Donald Trump.

In response to the tariffs and growth concerns, the BoE lowered its key interest rate by a quarter point to 4 percent earlier this month. The bank now expects inflation to peak at 4 percent in September before gradually easing.

“There is considerable pain yet to come for consumers at a time when economic weakness in the UK is becoming further exposed,” warned Lindsay James, investment strategist at Quilter.