Inflation rose 'more than expected' in July as Chancellor admits 'more to do'
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%.
READ MORE: LIVE: Latest updates as Kneecap's Mo Chara returns to court over terror charge
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.'
READ MORE: UK Government strikes returns deal with Iraq in latest migration crackdown
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.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
12 minutes ago
- Yahoo
Fed minutes: Most officials worried about inflation moving higher
WASHINGTON (AP) — Most Federal Reserve officials said last month that the threat of higher inflation was a greater concern than the potential for job losses, leading the central bank to keep its key rate unchanged. According to the minutes of the July 29-30 meeting, released Wednesday, members of the Fed's interest-rate setting committee 'assessed that the effects of higher tariffs had become more apparent in the prices of some goods but that their overall effects on economic activity and inflation remained to be seen.' The minutes underscored the reluctance among the majority of the Fed's 19 policymakers to reduce the central bank's short-term interest rate until they get a clearer sense of the impact of President Donald Trump's sweeping tariffs on inflation. So far inflation has crept up in the past couple of months but hasn't risen as much as many economists feared when Trump unveiled some of his duties. The Fed left its key interest rate unchanged last month at about 4.3%, though two members of its governing board dissented in favor of a rate cut. Both dissenters — Christopher Waller and Michelle Bowman — were appointed to the board during Trump's first term. At a news conference after the meeting, Chair Jerome Powell signaled that it might take significant additional time for the Fed to determine whether Trump's sweeping tariffs are boosting inflation. When the Fed changes its rate, it often — though not always — affects borrowing costs for mortgages, auto loans, and credit cards. The Fed typically keeps its rate high, or raises it, to cool borrowing and spending and combat inflation. It often cuts its rate to bolster the economy and hiring when growth is cooling. Christopher Rugaber, The Associated Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12 minutes ago
- Yahoo
Manchester Airport told to 'do more' on drop-off and pick-up fees
A government minister has written to Manchester Airport, raising concerns about its drop-off and collection fees. Oldham West, Chadderton and Royton MP Jim McMahon has called for a full review of signage and the appeals process for those who are fined. It comes after the RAC claimed that Manchester Airport was the most expensive UK airports on a 'cost-per-minute' basis, along with London Luton. Research shared by the company revealed that 11 out of 20 airports increased their drop off charges since last summer. However, drop- off fees at several airports, including Manchester, remain frozen. The current drop-off charge at all of the airport's three terminals is £5 for five minutes, increasing to £6.40 for up to 10 minutes, while those who take up to 30 minutes must pay £25. READ MORE: Prisoner held hand of Gooch gang boss Lee Amos as he clutched chest in agony behind bars, inquest into his death hears READ MORE: Crime scene investigators tape off city shopping centre as man rushed to hospital after attack Manchester Airport has defended its charges on motorists, saying that the five-minute drop-off option gives customers 'flexibility'. Sign up to the MEN Politics newsletter Due North here But Mr McMahon, a Labour MP and government minister, has raised concerns about the approach to drop-off and pick-up charges. He has called for 'more to be done' to make sure there is fairness and transparency for people across the region to use the airport. He said: "Having an international airport - the 3rd busiest in the UK and the busiest outside of London - on our doorstep is fantastic for our borough. "It gives local people great access to places around the world for holidays and business, which goes unmatched in the vast majority of the country. "The money being invested into the Airport City project and the upgrades to terminals 2 & 3 is investment which we support. "However, it is important during this summer holiday season to raise concerns about the approach to charging for drop-off and collections at the airport terminals, and the impact on drivers who find themselves faced with unfair charges." In his letter, the MP calls for a 'full review' of signage approaching the airport, at the terminals, and immediately on arrival, an end to the practice of 'stacking up charges' and a review of the appeals process given that unsuccessful appeals increase penalties further. The minister also asked the airport to publish data on income from the drop-off and collection charges so that there is transparency on how much money is made through duplicate charges and late payments. The Manchester Evening News understands that the airport has responded to Mr McMahon and has been invited him to visit. A Manchester Airport spokesperson said: "Drop-off and pick-up charges help us to manage demand for access to our forecourts, where space is limited, and reduce traffic congestion around the site. "It means that the areas remain efficient even at busy times because people are not staying there for extended periods. "This means people can feel assured that if they wish to use our pick-up or drop-off facilities they will be able to do so quickly and effectively. "There are clear signs in and around the drop-off and pick-up areas that remind people to pay online or over the phone by midnight the day after their visit. "We also offer a completely free drop-off facility next to the nearby JetParks 1 car park. It is served by a 24-hour shuttle bus that runs every few minutes and takes less than six minutes to get to all three terminals."
Washington Post
14 minutes ago
- Washington Post
Fed minutes: Most officials worried about inflation moving higher
WASHINGTON — Most Federal Reserve officials said last month that the threat of higher inflation was a greater concern than the potential for job losses, leading the central bank to keep its key rate unchanged. According to the minutes of the July 29-30 meeting, released Wednesday, members of the Fed's interest-rate setting committee 'assessed that the effects of higher tariffs had become more apparent in the prices of some goods but that their overall effects on economic activity and inflation remained to be seen.'
