UK inflation accelerated in July 2026 after several months of relative stability, with higher housing, energy and household costs becoming the main drivers of the increase.

The Consumer Prices Index rose by 2.9% over the 12 months to July, compared with 2.6% in June. A broader measure that includes owner-occupier housing costs increased from 2.8% to 3.1%. Both annual rates rose for the first time since March.

On a monthly basis, consumer prices increased by 0.3%. The headline number, however, tells only part of the story. Some household expenses became noticeably more expensive, while food inflation slowed and transport costs rose less sharply than before.

Food Inflation Keeps Cooling

Food offered a more encouraging picture. Food and drinks beverage prices rose by 1.3% over the year to July, down from 1.7% in June.

That was the lowest annual food inflation rate since September 2021. Prices were essentially unchanged during July itself. Some categories helped reduce inflation. Meat prices fell compared with the previous year’s pattern, while vegetables also became cheaper during the month.

Sugar, jam, honey, chocolate and confectionery contributed slightly less inflationary pressure than a year earlier.

There were small increases elsewhere, particularly for fish and bread and cereals, but they were not large enough to reverse the broader slowdown.

This matters because food has a direct and frequent effect on household budgets. Even modest changes are noticed quickly when they appear in weekly grocery spending.

Transport Provides Some Relief

Transport remained expensive compared with a year earlier, but inflation in this category slowed significantly.

Transport prices were 3.6% higher than in July 2025, down from annual growth of 5.7% in June. Fuel was the biggest reason.

Diesel prices dropped by 8.8 pence per litre between June and July, while petrol fell by 3.1 pence per litre.

As a result, annual motor-fuel inflation slowed from 21.3% in June to 15.5% in July.

Airfares also produced a downward effect on the overall transport rate.

Flight prices rose between June and July, but much less sharply than during the same period a year earlier. European routes were particularly notable, with prices falling by 4.3% during the month, while long-haul fares moved in the opposite direction and increased strongly.

Official statisticians noted that these contrasting movements may reflect differences in demand, fuel costs, airline capacity and route flexibility.

Furniture Discounts Were Smaller

Furniture and household goods moved back into positive annual inflation. Prices were 1.0% higher than a year earlier after falling by 0.2% in the 12 months to June.

Interestingly, prices still declined during July itself. The difference was that the monthly fall was only 0.4%, compared with a much larger 1.6% decline in July last year.

In other words, households still saw some summer discounting, but the reductions were weaker than usual.

July’s monthly fall was the smallest for this category since 1989.

Clothing Prices Also Change Direction

Clothing and footwear inflation turned positive as well.

Prices were 0.5% higher than a year earlier, following a 0.5% annual decline in June.

Clothing prices still fell by 0.9% during July, but that was smaller than the 1.9% fall recorded in July 2025.

One possible explanation is that discounting began earlier than usual this year. Warm weather may also have supported demand for seasonal clothing, reducing the need for retailers to cut prices as aggressively later in the summer.

Core Inflation Remains Mixed

Underlying inflation produced a more complicated picture.

Core CPI, which excludes food, energy etc remained unchanged at 2.6%.

Goods inflation increased from 1.7% to 2.2%.

Services inflation, however, eased from 3.6% to 3.4%.

That distinction is important because services inflation is often watched closely as an indicator of domestic price pressure. The fact that it slowed while goods inflation accelerated suggests that July’s headline increase was not broad-based across every part of the economy.

What the Numbers Mean

July’s figures show why inflation can feel very different depending on what a household spends money on.

Someone facing higher energy and housing costs may feel considerable pressure, even as supermarket inflation becomes noticeably calmer.

Drivers received some relief from falling petrol and diesel prices, while travelers faced very different experiences depending on whether they were booking European or long-haul flights.

The broader inflation measure reached 3.1%, while CPI climbed to 2.9%, slightly above July estimates for Germany and France.