INFLATION in the UK has risen by more than expected in July, according to the latest official figures.
Consumer Prices Index (CPI) inflation increased to 3.8% in July, from 3.6% in June, the Office for National Statistics (ONS) said.
Most economists had been forecasting inflation to rise to 3.7%.
It means the headline rate remained at the highest level since January 2024, when it hit 4%.
The ONS said transport was the biggest factor driving up overall inflation last month, particularly due to a spike in flight prices as families booked trips during the school summer holidays.
Air fares soared by 30.2% between June and July, the biggest jump since the collection of monthly data began in 2001.
The average price of petrol rose by 2p per litre between June and July, and the average diesel price by 2.9p per litre over the period, the data showed.
Prices across UK restaurants and hotels also increased last month, largely driven by a jump in overnight hotel stays booked the night before.
Food and drink inflation rose to 4.9% in July, from 4.5% in June.
This marked the fourth month in a row that the annual rate had increased and remained at the highest level since February 2024.
Grant Fitzner, the ONS’s chief economist, said: “The main driver was a hefty increase in air fares, the largest July rise since collection of air fares changed from quarterly to monthly in 2001.
“This increase was likely due to the timing of this year’s school holidays.
“The price of petrol and diesel also increased this month, compared with a drop this time last year.
“Food price inflation continues to climb – with items such as coffee, fresh orange juice, meat and chocolate seeing the biggest rises.”
Meanwhile, Chancellor Rachel Reeves admitted that there was “more to do to ease the cost of living” following the figures.
She said: “We have taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government, but there’s more to do to ease the cost of living.
“That’s why we’ve raised the minimum wage, extended the £3 bus fare cap, expanded free school meals to over half a million more children and are rolling out free breakfast clubs for every child in the country.”
Meanwhile, Deputy First Minister Kate Forbes said the Scottish Government is "taking steps with the limited powers we have" to reduce the cost of living.
She said: “Today’s rise in inflation to 3.8% – more than expected – proves that the cost of living and doing business in Scotland remains high.
“The rise in food costs is particularly concerning, and combined with high energy costs will put further pressure on hard-pressed people across the country – which is why the Scottish Government is taking steps with the limited powers we have, like abolishing peak rail fares and ensuring that pensioners get their winter fuel payments.
“The UK Government must focus efforts on bringing down inflation and improving our economy. We continue to urge them to reverse the damaging rise in employers National Insurance Contributions – which is a contributory factor behind increasing inflation and is severely damaging business confidence, investment, growth and jobs.”
