Story · United Kingdom · 19 Aug 2026
UK CPI inflation rose to 2.9% in July 2026
UK CPI inflation rose to 2.9% in the 12 months to July 2026 from 2.6% in June, while CPIH inflation increased to 3.1%.
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2.9%
UK CPI inflation, July 2026 vs July 2025
3.1%
UK CPIH inflation, July 2026 vs July 2025
2.6%
UK core CPI inflation, July 2026 vs July 2025
Exam link: Monetary policy → interest rates → consumption and investment → aggregate demand
Understand the storyExpand Close
ONS reported CPI prices rose 0.3% between June and July 2026, taking annual CPI inflation to 2.9% from 2.6%. CPIH annual inflation rose to 3.1% from 2.8%, while core CPI annual inflation was unchanged at 2.6%.
What happened
The Consumer Prices Index rose 0.3% in July 2026 and was 2.9% higher than in July 2025. CPIH, which includes owner-occupiers' housing costs, rose 3.1% over the year. Housing and household services and furniture contributed upward pressure, while transport partly offset the rise.
Why it matters
CPI is the inflation measure used for the UK's monetary-policy target. Higher inflation reduces real purchasing power and can increase the likelihood that the Bank of England keeps interest rates restrictive.
Economic context
The annual rate compares July 2026 with July 2025, whereas the monthly rate compares July with June 2026. CPIH is broader than CPI because it includes owner-occupiers' housing costs. Core CPI excludes energy, food, alcohol and tobacco and can help assess underlying inflation pressure.
All key dataExpand Close
- UK CPI, July vs June 2026
- +0.3%
- UK CPI inflation, July 2026 vs July 2025
- 2.9%
- UK CPIH inflation, July 2026 vs July 2025
- 3.1%
- UK core CPI inflation, July 2026 vs July 2025
- 2.6%
Terms explainedExpand Close
Core inflation
Inflation excluding especially volatile items, commonly food and energy, to show underlying price pressure more clearly.
Use it in an examExpand Close
Evidence
UK CPI inflation rose to 2.9% in the 12 months to July 2026 from 2.6% in June, while CPIH inflation increased to 3.1%.
Explain
Higher inflation → faster rise in the price level → lower real purchasing power and greater pressure on monetary policy → consumption, investment and aggregate demand may weaken
Evaluate
The economic effect depends on the source and persistence of inflation: a temporary supply shock has different implications from broad, demand-driven inflation, while wages and expectations determine the effect on real incomes.
Useful diagram: AD/AS diagram chosen according to whether inflation pressure is demand-pull or cost-push
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