Inflation live: UK rate rises to 3.8% as latest ONS figures released

Today’s new figures have confirmed the UK has seen the highest rate of inflation in 19 months.

The headline rate remained at the highest level since January 2024, when it hit 4 per cent.

Chancellor Rachel Reeves said there was “more to do to ease the cost of living” following the latest official figures showing UK inflation rose by more than expected last month.

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.

“Through our plan for change we’re going further and faster to put more money in people’s pockets.”

The inflation figures released by the Office for National Statistics this morning are higher than economists predicted.

It was widely believed inflation would rise to 3.7% in July.

The rate of Consumer Prices Index inflation rose to 3.8 per cent in July from 3.6 per cent in June, the Office for National Statistics said.

This is 0.1 of a percentage point higher than economists predicted, and means the headline rate remained at the highest level since January 2024, when it hit 4 per cent.

New figures from the Office for National Statistics set to be revealed soon are expected to show the rate of Consumer Prices Index (CPI) inflation increased to 3.7 per cent last month.

The Bank of England earlier this month warned chancellor Rachel Reeves that headline inflation would accelerate to 4 per cent by September, while food inflation would hit 5.5 per cent by Christmas – putting a squeeze on household budgets.

Sanjay Raja, senior economist for Deutsche Bank, said any rise in inflation last month could partly be attributed to British band Oasis kicking off their reunion tour.

The concerts brought hordes of fans to arenas in Cardiff, Manchester, London and Edinburgh, which could have driven greater demand for hotel rooms.

Accommodation prices could have risen by as much as 9 per cent compared with June, the Oasis concerts having a strong effect on Manchester prices alone, the economist said.

Mr Raja is predicting headline UK inflation will have risen to 3.8 per cent.

Susannah Streeter, head of money and markets for Hargreaves Lansdown, said: “The Oasis tour, which saw high demand for hospitality around the gig dates, has the potential to push up inflation in the sector during July.

“We are unlikely to see the Gallagher effect show up in quite the same way as Taylor Swift’s bump to prices in June 2024.

“But demand for hotel rooms, beer, bucket hats and Nineties-style gear could be one of the factors that keep inflation heading higher.”

A rise in inflation for six months running is likely to increase pressure on chancellor Rachel Reeves.

She urged the public this month to be patient with Labour on the economy, saying the change they voted for in last summer’s election was “never going to happen overnight”.

The word “embattled” has started to appear next to her name in headlines.

And bookmakers have made Ms Reeves favourite to be the next cabinet minister to lose her post.

Victoria Scholar, head of investment for Interactive Investor, said there were “particular worries about domestic food price inflation as well as uncertainty around how (US President Donald) Trump’s tariffs could push up prices”.

Commuters will brace themselves for a hike in rail fares.

July’s Retail Prices Index (RPI) measure of inflation, which may determine rail fare rises, will also be announced later.

The government has not said how it will decide the cap on regulated train fare rises in England next year, but this year’s 4.6% hike was one percentage point above RPI in July last year.

Banking group Investec has forecast this year’s July RPI figure will be 4.5%, which means fares could jump by 5.5%.

Pressure group Railfuture said it would be outrageous if fares rose by that much.