Inflation rose above 2 per cent in July in the first increase this year, official figures have shown.
The Office for National Statistics said the rate of Consumer Prices Index (CPI) inflation rose to 2.2 per cent in the 12 months to July, up from 2 per cent in June.
But this was still well below its recent peak of 11.1 per cent in October 2022.
It is the first time inflation has risen since December and was partly driven by a sharp drop in energy bills last July falling out of the annual calculations.
The Bank of England has a target of keeping inflation at 2 per cent and the latest figures come as its Monetary Policy Committee mulls whether to continue cutting interest rates.
The MPC voted to cut interest rates to 5 per cent at the beginning of this month but most economists predict rates will be held at its next decision in September.
The Bank of England said on August 1 that the fall-away of energy bills in the wider inflation figures would show ‘more clearly the prevailing persistence of domestic inflationary pressures’.
The Office for National Statistics said the rate of Consumer Prices Index ( CPI ) inflation rose to 2.2 per cent in the 12 months to July, up from 2 per cent in June
The latest figures mean that prices are rising faster across the country than in previous months, but still at a slower rate than in 2022 and 2023 when households and businesses were being squeezed during the peak of the cost of living crisis.
It is expected that inflation will continue to nudge up for the rest of 2024 before falling gradually again.
Darren Jones, Chief Secretary to the Treasury, said: ‘The new Government is under no illusion as to the scale of the challenge we have inherited, with many families still struggling with the cost of living.
‘That is why we are taking the tough decisions now to fix the foundations of our economy so we can rebuild Britain and make every part of the country better off.’
Jeremy Hunt, the Tory shadow chancellor, said: ‘Today’s figures show how important it is that the new Labour government follows the path of the previous Conservative government and focus on keeping inflation low.
‘In government, we took the difficult decisions to reduce inflation from 11.1 per cent to the Bank of England’s target of 2 per cent – paving the way for the first interest rate cut in four years.
‘However, there is clearly more to be done to keep inflation down. The Chancellor must not use this data as an excuse to break her promises and hike up taxes.
‘Tax rises she had planned all along.’
Grant Fitzer, chief economist at the ONS, said: ‘Inflation ticked up a little in July as although domestic energy costs fell, they fell by less than a year ago.
‘This was partially offset by hotel costs, which fell in July after strong growth in June.
‘The increase in cost of goods leaving factories slowed a little in the year to July, led by falling petrol prices.
‘Meanwhile, raw materials prices picked up for the first time in over a year, driven by smaller falls in gas and electricity costs.’