UK inflation rose by more than expected in July as demand for summer travel pushed up air fares and food prices continued to climb, according to official figures.
Consumer Prices Index (CPI) inflation increased to 3.8 per cent in July, from 3.6 per cent in June, the Office for National Statistics (ONS) said.
Most economists had been forecasting inflation to rise to 3.7 per cent. It means the headline rate remained at the highest level since January 2024, when it hit 4 per cent.
The ONS said the school summer holidays helped bump up travel costs last month, which helped drive up inflation across the UK.
Grant Fitzner, the ONS’s chief economist, said: ‘The main driver was a hefty increase in air fares, the largest July rise since collection of air fares changed from quarterly to monthly in 2001.
‘This increase was likely due to the timing of this year’s school holidays. The price of petrol and diesel also increased this month, compared with a drop this time last year.
‘Food price inflation continues to climb – with items such as coffee, fresh orange juice, meat and chocolate seeing the biggest rises.’
Chancellor Rachel Reeves said: ‘We have taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government, but there’s more to do to ease the cost of living.
‘That’s why we’ve raised the minimum wage, extended the £3 bus fare cap, expanded free school meals to over half a million more children, and are rolling out free breakfast clubs for every child in the country.
‘Through our Plan for Change we’re going further and faster to put more money in people’s pockets.’
Shadow chancellor Sir Mel Stride MP said: ‘This morning’s news that inflation has risen even higher than the 2 per cent target is deeply worrying for families.
‘Labour’s choices to tax jobs and ramp up borrowing are pushing up costs and stoking inflation – making everyday essentials more expensive.
‘And with leading economists warning that the Chancellor has blown a colossal black hole in the public finances, families and businesses are bracing for yet more pain come the Autumn Budget.
‘Families are paying the price for Rachel Reeves’ economic mismanagement. Britain can’t afford Labour.’
And shadow business secretary Andrew Griffith added: ‘The fault for this inflation lies squarely in Downing Street. Labour’s jobs tax, rates hikes and minimum wage rises have all fed through to higher prices – just as predicted.
Chancellor Rachel Reeves, pictured during a visit to Studio Ulster in Belfast on August 12
‘This should give the Chancellor real pause for thought before inflicting any more tax rises this autumn.’
Liberal Democrat Treasury spokesperson Daisy Cooper MP said: ‘Rising inflation is grim news for families, pensioners and businesses still struggling with the cost-of-living crisis.
‘After the Conservative Government oversaw the biggest fall in living standards on record, people desperately need things to change. But, so far, Labour has failed to offer a vision for the economy or a strategy to bring down the cost of living.
‘The Chancellor needs to take far bolder action, starting with the Liberal Democrat plan to halve energy bills by 2035.’
More to follow
