21/08/2026
Inflation Rises to 2.9%, Increasing Pressure on Bank of England
UK inflation rose to 2.9% in July, up from 2.6% in June, strengthening expectations that the Bank of England could consider raising Bank Rate before the end of the year. The increase was largely driven by higher energy costs following July’s 13% price-cap rise, while ongoing uncertainty around the Middle East and global energy supplies could keep inflation elevated.
The Bank’s next rate decision is due on 17 September, just one day after the August inflation figures are released, making those figures particularly important. Any further rise in Bank Rate would increase borrowing costs for tracker and variable-rate mortgage holders immediately, while fixed-rate borrowers could face higher costs when refinancing. With another energy price-cap increase expected in October, household affordability remains under pressure.
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