| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 0.4% | 0.3% to 0.4% | 0.3% | 0.1% |
| Year over Year | 3.0% | 2.8% to 3.0% | 2.9% | 2.6% |
| Core CPI - M/M | 0.2% | 0.3% | ||
| Core CPI - Y/Y | 2.5% | 2.5% to 2.8% | 2.6% | 2.6% |
Highlights
UK inflationary pressure strengthened in July 2026, with CPI increasing to 2.9 percent from 2.6 percent in June, while CPIH rose from 2.8 percent to 3.1 percent. Monthly increases of 0.3 percent for both measures also exceeded their July 2025 movements, indicating renewed upward pressure rather than a purely stable annual trend.
The composition of inflation presents a mixed economic picture. Housing, household services and furniture were the principal upward contributors, suggesting that essential living costs increasingly strained household budgets. Transport prices provided the largest downward contribution, offering partial relief but failing to reverse the broader acceleration.
Underlying inflation remained comparatively persistent. Core CPI was unchanged at 2.6 percent, whereas core CPIH increased slightly to 2.9 percent. More significantly, goods inflation rose from 1.7 percent to 2.2 percent, signalling that price pressures were becoming more widely distributed across physical products. Conversely, CPI services inflation eased from 3.6 percent to 3.4 percent, which may indicate gradual moderation in domestic wage-related pressures.
In summary, July’s figures reveal an uneven inflation landscape as services showed limited improvement, but rising housing and goods costs complicated progress towards price stability. These latest updates take the RPI to 23 and the RPI-P to 25, meaning that economic activities continue to outpace market expectations in the UK.
Market Consensus Before Announcement
CPI expected to worsen with increases of 0.4 percent on the month and 3.0 percent on year in July after rising 0.1 percent and 2.6. percent in June.
Definition
The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by the vast majority of households in the UK. It is calculated using the same methodology developed by Eurostat, the European Union's statistical agency, for its harmonised index of consumer prices (HICP). The CPI is the Bank of England's target inflation measure.
Description
The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as the UK, where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. Inflation is an increase in the overall price level of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
For monetary policy, the Bank of England generally follows the annual change in the consumer price index which is calculated using the European Union's Eurostat methodology so that inflation can be compared across EU member states.