It comes as the Bank of England<\/a> considers raising interest rates from as early as September in response to fears over stubbornly high inflation becoming entrenched in the economy.<\/p>\n The latest snapshot will also highlight the challenge facing Andy Burnham\u2019s government to ease the financial pressure on households and businesses before a difficult autumn budget.<\/p>\n Economists said a rise in inflation as measured by the consumer prices index was likely after Ofgem, the energy regulator, lifted its cap on household gas and electricity bills by 13% in July.<\/p>\n Thomas Pugh, chief economist at the accountancy firm RSM UK, said the increase would add about 0.44 percentage points to headline inflation. This would be partly offset by a fall in petrol and diesel prices.<\/p>\n \u201cThe cost of living squeeze is set to return to the headlines,\u201d he said. \u201c[Higher inflation is] adding fresh pressure to household budgets and complicating the outlook for interest rates.\u201d<\/p>\n As the stop-start Middle East war fuels volatility in the global oil price, countries around the world are facing renewed inflationary pressures and heightened uncertainty over the scale of the economic hit.<\/p>\n Britain\u2019s economy has shown more resilience than initially feared<\/a>, with official figures last week showing that it continued to grow in the first half of 2026 at the fastest pace in the G7. Inflation also fell by more than expected in June, to 2.6%<\/a> \u2013 down from a peak of 3.8% last year.<\/p>\n It is hoped the fall in petrol and diesel prices could partly offset the rise in energy bills. Photograph: Andy Rain\/EPA<\/p>\n Inflation had been on track to fall to close to 2% before the outbreak of the Iran war.<\/p>\n However, economists warn the impact from the conflict is likely to weigh more heavily in the second half of the year after the increase in the Ofgem energy price cap.<\/p>\n Separate figures on the UK jobs market due to be released on Tuesday are also expected to show a continued slowdown in wage growth.<\/p>\n skip past newsletter promotion<\/a>Free newsletter | Every weekday<\/p>\n Sign up to Business Today<\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n after newsletter promotion<\/p>\n With households under pressure from the renewed rise in energy costs, the Bank of England<\/a> predicts UK inflation will reach 3.2% before the end of the year, despite government measures to limit the impact.<\/p>\n Burnham used his first week as prime minister to announce a raft of \u201cbreathing space\u201d measures to ease the cost of living, including cutting VAT<\/a> to reduce consumer electricity bills by an average of \u00a345 a year from October.<\/p>\n The Bank said it expected the policy, alongside a \u00a32 cap on bus fares in England, to lower the headline inflation rate by 0.1 percentage point.<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/1782323175_693_500.jpg\")
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