UK inflation jumps to 3.8% hitting 19-month high after surge in food, petrol and travel prices

The rate of Consumer Prices Index (CPI) inflation is up from the 3.6 per cent figure recorded in June - and it is slightly higher than the 3.7 per cent figure economists had predicted.

It marks the steepest inflation rise since January 2024, data from the ONS has revealed.

Prices in the UK rose faster last month as school holidays boosted travel costs and grocery bills remain elevated, economists said.

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."

Some experts said an “Oasis bump” could have contributed to higher accommodation prices in July.

Read more: UK inflation set to rise as summer holidays and Oasis reunion push up travel costs

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Economists forecast inflation to reach 4 per cent by the end of the year.

Following the announcement, the Chancellor of the Exchequer, 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.”

Meanwhile, July's Retail Prices Index (RPI) measure of inflation has come in higher than expected at 4.8 per cent.

The Government has not confirmed how it will determine the cap on regulated train fare rises in England in 2026, but this year’s 4.6 per cent hike was one percentage point above RPI in July 2024.

Economists have also pointed to a possible spike in hotel prices helping to drive up CPI inflation in July.

Sanjay Raja, senior economist for Deutsche Bank, said this could partly be attributed to British band Oasis kicking off their reunion tour in July.

The concerts brought in hordes of fans to arenas in Cardiff, Manchester, London and Edinburgh, which could have driven greater demand for hotel rooms.

Accommodation prices could rise by as much as 9 per cent in July, compared with June, "with the Oasis concerts having a strong impact on Manchester prices alone," the economist said.