UK inflation rose to 3.8% in July, driven by food and travel costs, undermining hopes for further rate cuts and prompting further government intervention.
British annual inflation accelerated to 3.8 percent in July, up from 3.6 percent in June, marking the highest rate since the start of 2024, the Office for National Statistics said Wednesday. The increase exceeded analysts’ expectations of 3.7 percent .
The jump was largely driven by higher air fares and food prices, with food inflation—especially for staples like beef, coffee, and chocolate—putting additional pressure on households . The inflation update, combined with a stronger-than-expected performance in the UK economy during the second quarter, has tempered expectations for further interest rate cuts this year by the Bank of England .
Finance Minister Rachel Reeves commented, “there’s more to do to ease the cost of living.”
Investment strategist Lindsay James of Quilter warned, “There is considerable pain yet to come for consumers at a time when economic weakness in the UK is becoming further exposed.”