# UK Inflation Climbs to 2.9% in July, Driven by Increased Energy Costs

*Britain's inflation rate increased to 2.9% in July, driven by higher energy bills.*

August 19, 2026 · business

## At a glance

- UK inflation rose to 2.9% in July, up from 2.6% in June.
- The increase was driven by a 13% hike in the price cap on household energy bills.
- The rise in energy prices is a consequence of the ongoing US-Iran war.
- Britain's new Prime Minister Andy Burnham has introduced measures to ease cost-of-living pressures.

Britain's annual inflation rate climbed to 2.9% in July, up from 2.6% in June, according to the Office for National Statistics (ONS). The rise was primarily driven by a 13% increase in the price cap on household energy bills, a consequence of the ongoing US-Iran war. The ONS noted this as the largest rise in gas prices for almost four years.

## Energy Prices Surge

The increase in the price cap on household energy bills was a significant factor in the rise of inflation. This hike was a direct result of the escalating conflict in the Middle East, particularly the US-Iran war, which has disrupted global energy markets. The Bank of England has kept its benchmark interest rate at 3.75% despite inflation remaining above its two-percent target.

## Government Response

In response to the rising cost of living, Britain's new Prime Minister Andy Burnham has introduced measures to alleviate the pressure on households. These include a tax cut on household electricity prices and a cap on bus fares. Finance minister John Healey acknowledged the impact of the Iran war on domestic prices but expressed confidence in the resilience of the British economy.

## Analysts' Predictions

Analysts predict that inflation will continue to rise towards the end of the year as higher energy costs further impact bills. There are currently no signs of a resolution to the Middle East conflict, which means that price pressures are likely to persist. Jonathan Raymond, an investment manager at Quilter Cheviot, noted that the situation in the Strait of Hormuz remains volatile, suggesting that inflationary pressures will continue.

## Why This Matters for Bangladesh

The rise in UK inflation, driven by higher energy prices, highlights the global impact of geopolitical conflicts on economies. For Bangladesh, which relies heavily on imported energy and is sensitive to global price fluctuations, this serves as a reminder of the importance of energy security and the need for policies that can mitigate the effects of such global disruptions.

## Sources

- BSS

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Source: https://pulsetoday.com.bd/en/business/uk-inflation-jumps-29-percent-july-higher-energy-bills