UK CPI Rebounds to 2.9% in July as June's Soft Reading Unwinds

UK Consumer Prices Index inflation rose to 2.9% in the 12 months to July 2026, up from 2.6% in June, according to the Office for National Statistics' bulletin released on 19 August 2026 (ONS). The acceleration reverses a notable deceleration in the June print, which had been the weakest annual CPI reading since March 2025 (Reuters).

The June figure itself marked a distinct cooling. CPI came in at 2.6% year-on-year, down from 2.8% in both April and May, according to the ONS bulletin published on 22 July (ONS). On a monthly basis, May 2026 had seen a 0.2% increase. The July rebound therefore pushes the headline rate back above the levels that held steady through the spring.

The broader inflation picture, captured by the Consumer Prices Index including owner occupiers' housing costs (CPIH), tells a similar story. CPIH rose by 3.1% in the 12 months to July 2026, up from 2.8% the previous month. On a monthly basis, CPIH advanced 0.3% in July 2026, having been little changed in July 2025. The CPIH all-items index stood at 142.7 (2015=100) in July, while the CPI all-items index was fractionally higher at 142.9 (ONS).

The Retail Prices Index, a legacy measure that the ONS classifies as a non-National Statistic, recorded a 3.2% annual change in July 2026. The RPI all-items index stood at 419.1 (January 1987=100).

The trajectory matters for several constituencies. For the Bank of England's Monetary Policy Committee, June's dip toward 2.6% may have looked like a clean disinflationary signal; July's snap back to 2.9% complicates that narrative. The gap between headline CPI and CPIH, which widened to 0.2 percentage points in July from roughly parity in June, is worth watching: a rising CPIH relative to CPI typically signals accelerating housing-cost pressures, particularly in mortgage interest payments and owner-occupier housing depreciation components that CPIH captures but CPI does not.

The monthly 0.3% CPIH increase in July, against a near-flat comparable month a year earlier, means the base-effect tailwind from July 2025 has turned into a headwind. Any month where the current print exceeds the prior-year equivalent mechanically pushes the annual rate higher. That is exactly what happened here.

For index-linked gilts, the RPI at 3.2% feeds directly into coupon and principal uprating. For wage negotiators and pension trustees using CPI as a benchmark, the move from 2.6% back to 2.9% in a single month is a reminder that the disinflation path remains uneven. The Bank of England's 2% target now sits a full percentage point below the July CPI headline.

The next ONS consumer price inflation bulletin is scheduled for release on 16 September 2026, covering the August data. Whether July's rebound proves a one-month aberration or the start of a re-acceleration trend will hinge on the composition of the monthly increase, which the bulletin's detailed component breakdown will clarify. What is already clear is that June's soft reading, which Reuters flagged as the weakest since March 2025, did not hold for long.

The current data window captures a period of volatility rather than a smooth descent. CPI moved from 2.8% in April to 2.8% in May, dropped to 2.6% in June, and rebounded to 2.9% in July. That range, from 2.6% to 2.9%, brackets the kind of sticky, above-target inflation that keeps central banks cautious about easing too quickly.