UK inflation rose to 2.9% year-on-year in July from 2.6% in June, its highest level since March, matching market expectations after Ofgem raised the energy price cap by 13% and gas bills jumped 14.7%, the steepest increase since October 2022. Core CPI held steady at 2.6% while CPIH rose to 3.1% from 2.8%, leaving underlying pressures contained even as housing and household services drove the headline increase. The reading remains above the Bank of England’s 2% target but far below the 11.1% peak of October 2022, reinforcing expectations that the Monetary Policy Committee will keep the policy rate at 3.75% at its September 17 meeting. Vicky Pryce, Chief Economic Adviser at the Centre for Economics and Business Research, warned that continued energy shocks linked to geopolitical tensions, including the US-Israel conflict with Iran, are likely to strain households and businesses, with the next Ofgem price-cap review a key autumn risk if global energy prices stay elevated. Sterling held firm after the data, while investors also watch rising gilt issuance and Middle East-driven energy risks feeding through the cap mechanism.