UK inflation rises to 3.8%, driven by high accommodation and travel costs
The Office for National Statistics (ONS) published the latest inflation data on Wednesday, showing the rate of Consumer Prices Index (CPI) rose from June's figure of 3.6% to 3.8% last month.
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 the school summer holidays helped bump up travel costs last month, which helped drive up inflation across the UK.
Some experts said an 'Oasis bump' could have contributed to higher accommodation prices in July.
ONS Chief Economist Grant Fitzner said: "Inflation rose again this month to its highest annual rate since the beginning of last year.
"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."
He went on to say: "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."
Economists pointed to a possible spike in hotel prices helping drive up CPI inflation in July.
Sanjay Raja, senior economist for Deutsche Bank, said this could partly be attributed to British band Oasis kicking off their reunion tour in July.
The concerts brought in hordes of fans to arenas in Cardiff, Manchester, London and Edinburgh, which could have driven greater demand for hotel rooms.
Accommodation prices could rise by as much as 9% in July, compared with June, 'with the Oasis concerts having a strong impact on Manchester prices alone', the economist said.
Food prices have also been rising in recent months – partly driven by higher ingredients, labour and regulatory costs.
Annual food price inflation increased for the third month in a row in June, hitting the highest rate since February 2024.
Victoria Scholar, head of investment for Interactive Investor, said there were 'particular worries about domestic food price inflation as well as uncertainty around how Trump's tariffs could push up prices'.
The Bank of England is forecasting that inflation will increase further this year and peak at about 4% in September, before easing throughout the next two years.
The central bank said accelerating food and energy prices have been key drivers in the uptick in inflation.
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