UK inflation accelerated in July, with CPI rising from 2.6% to 2.9% y/y, matching consensus. Prices increased 0.3% m/m, compared with 0.1% in July 2025. Core CPI held at 2.6% y/y, slightly above expectations for 2.5%, but composition was less inflationary than headline suggested: services inflation eased from 3.6% y/y to 3.4%, while goods inflation accelerated from 1.7% y/y to 2.2%.
Housing and household services drove much of increase, with annual inflation jumping from 1.2% y/y to 4.6% and prices rising 2.3% m/m on month. Health inflation also accelerated from 2.5% y/y to 3.7%, while clothing and footwear moved from -0.5% y/y to 0.5% and alcohol and tobacco from 2.1% y/y to 2.5%. Those increases were partly offset by softer food inflation, which eased from 1.7% y/ to 1.3%, and transport inflation, which slowed sharply from 5.7% y/y to 3.6%.
Overall, July was a firmer inflation report at headline level without showing a broad-based reacceleration in underlying pressure. Services inflation, one of more persistent parts of UK price picture, continued to cool, while acceleration was concentrated more heavily in goods and housing-related categories. That leaves headline inflation moving higher even as some of stickier components show further moderation.
Data Summary
| Indicator | Actual | Expected | Previous |
|---|---|---|---|
| CPI y/y | 2.9% | 2.9% | 2.6% |
| CPI m/m | 0.3% | 0.3% | 0.1%* |
| Core CPI y/y | 2.6% | 2.5% | 2.6% |
| CPI Goods y/y | 2.2% | — | 1.7% |
| CPI Services y/y | 3.4% | — | 3.6% |
| Housing & Household Services y/y | 4.6% | — | 1.2% |
| Health y/y | 3.7% | — | 2.5% |
| Food & Non-Alcoholic Beverages y/y | 1.3% | — | 1.7% |
| Transport y/y | 3.6% | — | 5.7% |
| Restaurants & Hotels y/y | 4.0% | — | 4.4% |
*Monthly comparison in supplied ONS release is against July 2025.
Key Takeaways
- UK headline CPI accelerated from 2.6% to 2.9% y/y in July, exactly matching consensus.
- Core CPI held at 2.6%, slightly above expectations for a decline to 2.5%.
- Inflation composition was mixed rather than uniformly hotter. Goods inflation accelerated from 1.7% to 2.2%, while services inflation eased from 3.6% to 3.4%.
- Housing and household services provided a major upward contribution, with annual inflation jumping from 1.2% to 4.6%.
- Health inflation also strengthened from 2.5% to 3.7%, while clothing and footwear returned to positive annual inflation.
- Several categories cooled, including food inflation from 1.7% to 1.3%, transport from 5.7% to 3.6%, and restaurants and hotels from 4.4% to 4.0%.
- Overall, July delivered firmer headline inflation without a broad resurgence in persistent services pressure, leaving underlying picture more balanced than 2.9% headline alone suggests.
