19 August 2026
If you are covering the latest UK inflation figures from the Office for National Statistics, please find below a comment from Jonathan Raymond, investment manager at Quilter Cheviot:
“With July’s energy price cap now in effect, inflation in the UK has jumped once again and is back to touching 3%. Consumer prices inflation came in at 2.9% for July, up from 2.6% in June as the effects of the war in Iran started to be felt by UK households thanks to that price cap rising 13%. Core inflation, which does strip out energy and food costs, also proved stubborn although remain unchanged from July at 2.6%.
“A renewed spike in inflation has been expected as the war in the Middle East continues to navigate a clunky ceasefire. Things remain far from normal in the Strait of Hormuz and look unlikely to be resolved any time soon, meaning pressure is likely to remain on prices for the remainder of the year at least.
“That said, inflation is expected to moderate in the coming months as government activities begin to take effect on the headline number. Cuts to VAT on energy bills and discounted leisure and hospitality offerings will begin to feed through in official numbers, but unlikely at the pace needed by the Bank of England to feel safe to start considering rate cuts. Indeed, these government initiatives are unlikely to move the economic dial until the Budget comes around in October.
“Indeed, today’s data combined with last week’s surprisingly upbeat growth figures means the Bank of England is likely to remain cautious at its next meeting and continue to wait for more concerning data before acting either way. The direction of travel remains that one rate rise is coming this year, but we still have one more inflation statistic release before it next meets. Interest rates back at 4% will be difficult for consumers to stomach, but until it is clear that the impact of events in the Middle East have subsided and the UK economy is back on an even keel, this period of higher for longer is likely to remain in place for the foreseeable future.”
