Inflation rises to 2.2% due to energy prices

Inflation increased for the first time this year in July, as energy prices fell less than they did a year ago, according to the latest figures from the ONS.

Prices rose 2.2% in July, up from 2% the previous month, but came below analysts previous estimates of 2.3%.

Although monthly gas and electricity prices fell by 7.8% and 6.8% respectively in July 2024 these falls were less than their equivalent falls in July 2023 (negative 25.2% and negative 8.6%).

Offsetting the pressure from energy prices, the largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year.

Prices for restaurants and hotels fell by 0.4% between June and July this year, compared with a rise of 0.9% a year ago. The annual rate rose by 4.9% in the year to July 2024, down from 6.3% in the year to June. The slower annual rate was almost entirely because of the price of hotels, which saw a monthly fall of 6.4% compared with a rise of 8.2% a year ago.

Meanwhile, food and non-alcoholic beverage prices rose by 1.5% in the year to July 2024, the same rate as the year to June. The June figure is the joint lowest annual rate since October 2021, when it was 1.3%, and it is the first time since March 2023 that the annual rate has not eased, having seen 15 consecutive months of slowing prices before then.

ONS chief economist Grant Fitzner said: “Inflation ticked up a little in July as although domestic energy costs fell, they fell by less than a year ago.

“This was partially offset by hotel costs, which fell in July after strong growth in June. The increase in cost of goods leaving factories slowed a little in the year to July, led by falling petrol prices. Meanwhile, raw materials prices picked up for the first time in over a year, driven by smaller falls in gas and electricity costs.”