UK inflation forecast to hit 2.9% in July on energy bill surge
British households are heading into another cost of living squeeze. Economists expect official figures due Wednesday to show UK headline inflation reaching 2.9% in July, driven by the sharp rise in gas and electricity bills that took effect at the start of the month.
The timing compounds an already difficult moment. Iran war disruption to global energy markets has kept wholesale gas prices elevated through the summer, and the July figures will be the first to fully capture the household bill increases that followed. The Bank of England's 2% target, which briefly looked within reach in the spring, is now receding again.
For the incoming prime minister, the numbers land as a statement of constraints. Any fiscal response — bill support, targeted transfers, energy price intervention — runs into a Treasury position already stretched by defence commitments and the residual cost of earlier support schemes.
Prediction markets on UK rate cuts have repriced over the past fortnight. A September reduction, which was trading near 60% in late July, has fallen back toward 35% as the inflation trajectory has reasserted itself. The Bank cannot cut into a 2.9% print without a credible forward path down, and the energy component offers none before the fourth quarter at the earliest.
