The products that increased in price most since 2021 – and the (surprising) ones now a lot cheaper

19th August, 2026 | News

UK Inflation Rises to 2.9% as Energy Costs Put Pressure on Households

UK inflation increased to 2.9% in July 2026, adding to concerns over rising household costs as consumers also face the prospect of higher energy bills during the coming winter.

The latest figures have renewed concerns about the pressure on household finances, with rising energy costs contributing to the increase in prices.

Wholesale gas prices in the UK have climbed to their highest level in more than three and a half years, exceeding levels recorded during the early weeks of the Iran war.

Analysts say continued disruption to shipping through the Strait of Hormuz, alongside lower-than-usual gas storage levels in Europe, has contributed to the increase in wholesale gas prices.

Higher gas prices can have a significant impact on electricity costs because gas-fired power stations are often used to meet demand when electricity from cheaper sources such as wind and solar is insufficient.

The latest inflation data also highlights how dramatically the prices of everyday goods and services have changed since the beginning of the cost-of-living crisis.

According to research by investment platform AJ Bell, overall prices have increased by about 28% since July 2021. Only 14 of the 192 categories that make up the Consumer Prices Index (CPI) are reportedly cheaper than they were five years ago.

Olive oil recorded one of the largest increases, with prices rising by 116%. Mortgage interest costs increased by 152%, while offal prices rose by 76%.

The sharp rise in olive oil prices has been linked to poor harvests and increased energy costs, while concerns over weather conditions and drought in Europe could put further pressure on prices.

Meanwhile, wage growth remains stronger than inflation. Official figures show that wages increased by 4.1% in the three months to April compared with the same period a year earlier.

The stronger wage growth could have implications for state pension payments under the government’s triple-lock system, which guarantees an annual increase based on whichever is highest among inflation, average earnings growth or 2.5%.

If wage growth remains at 4.1% through the relevant period, state pensioners could receive an increase of about £514.80 next year, taking the annual state pension to approximately £13,062.40.

However, the final increase will depend on official wage and inflation figures due to be released in the coming months.

With energy prices, household costs and borrowing expenses remaining under pressure, consumers are expected to continue facing financial challenges as the UK heads into the winter months.