Prices across the UK rose by 3.8% in the year leading up to July, mainly driven by a surge in air fares and rising food costs. This is the highest inflation level since January 2024 and well above
the Bank of England's 2% target, according to the latest figures from the Office for National Statistics (ONS).
Air fares spiked in part because of the timing of school holidays, while the cost of everyday food items like beef, chocolate, instant coffee, confectionery, and fresh orange juice also went up.
The slightly higher-than-expected rise in inflation is likely to influence the Bank of England’s approach to interest rates, with economists now expecting a slower pace of rate cuts.
In June, inflation as measured by the Consumer Prices Index (CPI) was 3.6%, so July’s 3.8% marks a clear upward trend. The Bank of England’s latest forecast expects inflation to peak at 4% in September.
ONS chief economist Grant Fitzner highlighted a “hefty” 30.2% increase in air fares between June and July—the biggest jump for that month since the ONS began collecting monthly data in 2001. He noted this spike was likely linked to the timing of this year’s school holidays, which coincided with the ONS’s data collection day, unlike last year.
Fuel prices also contributed to the rise, with petrol and diesel now costing more than they did at the same time last year. Meanwhile, the cost of food and non-alcoholic drinks climbed 4.9% over the year, up from 4.5% in June. This marks the fourth consecutive month of rising food and drink prices, reaching their highest levels since February 2024.
For shoppers like Michelle Birkenhead, the increases are keenly felt. “It’s so expensive,” she says. “It’s gone up so much, it’s ridiculous. What used to cost us £100 for a weekly shop two years ago now costs around £150.”
Another measure of inflation, the Retail Prices Index (RPI), rose to 4.8% in the year to July, up from 4.4% in June. Unlike CPI, RPI includes mortgage interest payments and buildings insurance, and it is used to help set train fares in England.
Rail fares increased by 4.6% this year, one percentage point above RPI in July 2024. If the same pattern were followed, fares in 2026 could rise by 5.8%, though the Department for Transport says no decisions have been made about next year’s fares yet.
Why are food prices still rising?
Experts point to ongoing pressures from supply chains, global commodity prices, and higher costs for staples like meat and dairy, which continue to push up the price of groceries for households across the UK.
