UK inflation last month climbed to its highest level in almost a year and a half, as fuel and food prices rose in particular.
The consumer prices index rose 3.8% in July, the Office of National Statistics revealed, up from 3.6% in June and higher than the 3.7% that economists expected.
Earlier this month, the Bank of England forecast that inflation would rise to a peak of 4.0% next month.
The ONS also revealed that core CPI, which excludes more volatile prices such as food and fuel, also rose 3.8%, up from 3.7%.
ONS chief economist Grant Fitzner said: "Inflation rose again this month to its highest annual rate since the beginning of last year.
"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," he said.
Petrol and diesel prices also increased, compared with a drop this time last year, while food price inflation continues to climb.
He said items such as coffee, fresh orange juice, meat and chocolate saw the biggest rises.
Economist Edward Allenby at Oxford Economics, said he, like the BoE, expects headline inflation to climb to a 4% peak in September and then "drift lower, with the contribution from the energy and food categories likely to fall in the final months of this year and through 2026".
"Though services inflation will remain sticky in the near-term, it should start to cool steadily next year."
The hotter than expected inflation was driven primarily by airfares and so the Bank of England "won’t be too concerned", said ING economist James Smith.
This "doesn’t mean the central bank will relax entirely", he says, with officials keeping an "unusually keen eye on food inflation right now", which picked up further to 4.9%, from 2% at the end of last year.
Food prices are particularly interesting to the BoE for two reasons, Smith suggested, due to correlations with restaurant and cafés that make up 40% of services inflation, and as they are seen as an important driver of household inflation expectations.
ONS corrects error
The ONS says it has "identified a minor error" but that it has "no impact" on the headline inflation rates.
It said the error was "in the imputation of missing seasonal item indices", which has now been redesigned as part of a modernisation process.
Looking at the details, the statistical body's explanation is that there was a 0.1 percentage point impact on annual growth of two 'divisions' of price data – furniture, household equipment and maintenance, and recreation and culture – for the period between February to June 2025.
As per its normal correction practice, the ONS said the indices have not been corrected for those months, but the correction of the error is reflected in the July indices.