UK Inflation has risen to its highest level in a year and a half as air fares and food prices continued to climb, according to official figures.
The rate of price growth increased to 3.8% in July, from 3.6% in June, the Office for National Statistics (ONS) said.
Grant Fitzner, chief economist at the ONS, 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."
The price of petrol and diesel also increased in July, compared with a drop this time last year. Food price inflation continued to climb, with coffee, meat and chocolate seeing the biggest rises.
Stuart Morrison, research manager at the British Chambers of Commerce said: “The inflation warning lights continue to flash, with July’s rate being slightly higher than most analysts had forecast. Prices are now rising at the fastest rate since the start of 2024, with little sign that inflation will be near the Bank’s target of 2% anytime soon.
“Our surveys show inflation remains a real concern for over half of SMEs. Businesses tell us national insurance, wage growth and tariffs are all bubbling away in a cauldron of price pressures. While many firms are desperate to see further interest rate cuts, there’s now growing concern that persistent inflation will limit the scope for further reductions.
“It’s vital that policymakers ease the cost pressures on business. Our message to the Chancellor is clear – no new tax rises on business in the Budget. Firms can’t drive forward economic growth if they are continuing to face cost pressures from several directions.”
This morning, Chancellor Rachel Reeves said there is "more to do to ease the cost of living."
Shadow chancellor Mel Stride has blamed the government for today’s slightly higher than expected result.
He said: "Labour’s choices to tax jobs and ramp up borrowing are pushing up costs and stoking inflation – making everyday essentials more expensive."
FTSE 100
The UK's flagship share index, the FTSE 100, was up 18-points at 9,180 shortly after opening this morning.
Brent crude oil futures were down 0.72% at $65.38 a barrel.