Inflation rises to 2.2% in first increase of 2024, taking rate back above Bank of England target
14 August 2024, 07:05 | Updated: 14 August 2024, 07:20
Inflation has risen to 2.2%, in the first increase since December.
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The Office for National Statistics said that the Consumer Price Index rose by 2.2% in the 12 months to July 2024, up from 2% in June 2024.
Officials said this mainly driven by prices of gas and electricity falling by less than a year ago.
The ONS said: "The largest upward contribution to the monthly change in... CPI annual rates came from housing and household services where prices of gas and electricity fell by less than they did last year; the largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year."
Some economists had predicted a slightly bigger rise in inflation, to 2.3%.
Inflation hit a peak of 11.1% in October 2022, after a sharp rise in energy prices following Russia’s invasion of Ukraine, sparking a rise in interest rates.
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Responding to the latest figures, Darren Jones, Chief Secretary to the Treasury, said:“The new Government is under no illusion as to the scale of the challenge we have inherited, with many families still struggling with the cost of living.
"That is why we are taking the tough decisions now to fix the foundations of our economy so we can rebuild Britain and make every part of the country better off."
The increase in inflation will "create a challenging backdrop" for the Bank of England, according to Dan Hanson, chief UK economist at Bloomberg Economics.
The Bank cut the base rate to 5% at the start of August, in a boost to people seeking a mortgage, and some economists expect two more cuts this year - taking the rate to 4.5% by the end of 2024.
Mr Hanson continued: "While the rise can be easily explained by base effects associated with energy prices, the optics of easing policy when inflation is on the rise aren't favourable."
