UK Inflation Hits Highest Level Since January 2024
Key Takeways:
- UK inflation climbed to 3.8% in July, its highest since January 2024, driven by soaring airfares and sticky food prices.
- Lower-income households and small businesses are being hit hardest, with affordability and cost pressures intensifying.
- The Bank of England expects inflation to peak around 4% in September, but the path back to target is likely to be slow and uneven.
Inflation in the UK rose to 3.8% in the year to July, according to the latest figures from the Office for National Statistics (ONS) – the highest rate recorded since January 2024.
The figure came in slightly above economists’ expectations, underscoring the persistent pressure on household budgets.
What’s Driving the Rise?
The main driver was a 30.2% surge in air fares, fuelled by higher school holiday prices as families travelled during the peak summer season.
Food prices also continued to climb, with annual inflation on groceries and non-alcoholic drinks rising to 4.9%. The ONS highlighted particularly steep increases in the price of beef, instant coffee and orange juice.
Over the past five years to July, food and drink prices have risen by around 37% in total, intensifying concerns about affordability for households.
Bank of England Forecasts a Peak
The Bank of England has forecast inflation will peak at around 4% in September before easing back towards its 2% target in the coming year.
But experts warn that the road to lower inflation could be slow. The BBC’s deputy economics editor Dharshini David noted that persistent food price rises remain a concern, while correspondent Colletta Smith emphasised that lower-income households will bear the brunt of the increases.
Political Reaction
Chancellor Rachel Reeves acknowledged the challenge, saying there was still “more to do to ease the cost of living”.
Her opposite number, Mel Stride, described the figures as “deeply worrying for families”, accusing the government of failing to get a grip on rising costs.
Impact on Businesses and Households
Businesses across the country are also feeling the strain. A chocolate shop owner in Manchester told the BBC they were turning to “innovative solutions” to cut costs, while a farmer in Cheshire warned that a poor harvest this year could push up the price of eggs and meat.
The combination of higher input costs, supply chain pressures, and weak consumer demand is creating a difficult environment for many small and medium-sized enterprises.
What’s Next?
With inflation set to remain elevated through the autumn, households and businesses alike are bracing for further pressure. Analysts will be closely watching the ONS’s next release, due in September, for signs that price growth is finally cooling.
Until then, the message is clear: while the UK is no longer in the grip of double-digit inflation, the battle against rising costs is far from over.
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