Air fares and food prices push up inflation to 3.8% in July
That means inflation is at its highest level since January 2024 and still far above the Bank of England's target of 2%.
The cost of eating out, as well as food and non-alcoholic beverages more generally, helped to push up prices, according to the Office for National Statistics (ONS).
Beef, chocolate and confectionery, instant coffee, and fresh orange juice saw some of the biggest price rises.
July's inflation rise was slightly higher than most economists had predicted and compares with a rise of 3.6% in the year to June.
The Bank's latest forecast expects inflation to peak at 4% in September.
ONS chief economist Grant Fitzner said the "hefty" increase of 30.2% in air fares between June and July was the biggest jump for that period since the collection of monthly data began in 2001.
He said it was "likely due to the timing of this year's school holidays".
This year, the collection day for the ONS data overlapped with the start of the school holidays in a way they didn't last year.
The cost of food and non-alcoholic beverages rose 4.9% in the year to July, up from 4.5% in the year to June. It was the fourth month in a row in which food and drink inflation had risen, bringing prices to their highest since February 2024.
AJ Bell head of financial analysis Danni Hewson said the "weekly trip to the local supermarket... gives most of us the greatest insight into our cost of living".
"With UK farmers highlighting the expected impact of a dry summer on food production, many households will be worried that it's going to take a considerable amount of time before these higher prices unwind."
'Cost of my weekly shop has gone up so much'
Rising food and fuel prices are "stretching" Michelle Birkenhead's finances.
But she says budgeting for her family has been the key to managing her money and planning ahead for social activities.
"It's so expensive," says Michelle. "It's gone up so much, it's ridiculous. What used to cost us, two years ago, a weekly shop of £100, you're looking at £150."
Policy makers at the Bank of England take into account inflation and other economic data when deciding what to do about interest rates.
Earlier this month, they narrowly voted to cut rates to 4%, down from 4.25%, taking rates to their lowest for more than two years.
Why is UK inflation still rising?
What are interest rates and will they fall further?
ONS delays release of sales data over quality concerns
Inflation is now predicted to hit 4% in September, which would not normally prompt further interest rate cuts.
However, at the same time, the economy has been struggling to grow and the jobs market is uncertain, which would usually encourage the Bank to cut rates to encourage spending.
Bank of England governor Andrew Bailey told the BBC that this month's decision to cut rates at been "finely balanced" and that the future course of interest rates was "a bit more uncertain frankly".
"Interest rates are still on a downward path," he said. "But any future rate cuts will need to be made gradually and carefully."
Reacting to the latest figures, Chancellor Rachel Reeves said the government had "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 she added: "There's more to do to ease the cost of living."
Shadow chancellor Mel Stride said the news on inflation was "deeply worrying for families".
"Labour's choices to tax jobs and ramp up borrowing are pushing up costs and stoking inflation - making everyday essentials more expensive."
Liberal Democrat treasury spokesperson Daisy Cooper said rising inflation was "grim news for families, pensioners and businesses still struggling with the cost-of-living crisis".
She said the chancellor needed to take "far bolder action, starting with the Liberal Democrat plan to halve energy bills by 2035".
Another measure of inflation, the Retail Prices Index (RPI) rose to 4.8% in the year to July, up from 4.4% in June. RPI differs from CPI in that it includes mortgage interest payments and buildings insurance.
It is also used to determine upcoming hikes in train fares in England.
This year's rise of 4.6% was one percentage point above RPI in July 2024, meaning that if the same pattern was adopted, fares in 2026 would rise by 5.8%.
However, the Department for Transport has said that no decisions have been made yet on next year's fares "but our aim is that prices balance affordability for both passengers and taxpayers".
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