Inflation in the UK edged up to 3.8% in the year to July, according to the Office for National Statistics (ONS), marking the highest rate since January 2024. The rise was fuelled by a steep increase in air fares, alongside higher food and drink prices. Economists warn the stronger-than-expected figure could prompt the Bank of England to slow its pace of interest rate cuts.

The ONS reported a sharp 30.2% rise in air fares between June and July — the biggest jump for that period since records began in 2001 — linked to the timing of school holidays. Meanwhile, petrol and diesel prices also climbed compared with a fall at the same time last year. Food inflation continued to mount, with beef, confectionery, instant coffee and fresh orange juice driving a 4.9% annual rise in food and non-alcoholic drink prices.

The Retail Prices Index (RPI), another measure of inflation, rose to 4.8%, fuelling concerns about future rail fare hikes. If current trends continue, ticket prices in England could rise by nearly 6% in 2026, though ministers say no decision has yet been made.

Economists remain split on future Bank of England action. While further rate cuts are still expected this year, analysts warn that persistently high food and energy prices could force policymakers to tread carefully. Chancellor Rachel Reeves welcomed progress compared with the double-digit inflation of recent years but admitted “there’s more to do” to ease cost pressures on households.