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The Office for National Statistics published July’s inflation figures yesterday, 19 August 2026. CPI, the headline measure, rose to 2.9% in the twelve months to July, up from 2.6% in June. CPIH, which includes owner occupiers’ housing costs, rose to 3.1%, up from 2.8%.
Both measures moved the wrong way for anyone hoping rates would keep falling. Here is what actually drove the number, and what it means for the Bank of England’s next decision.
CPI rose to 2.9% in July, up from 2.6% in June (ONS, 19 August 2026).
CPIH, which includes housing costs, rose to 3.1%, up from 2.8%.
Gas prices rose 14.7% in the year to July after Ofgem's price cap increase, the single biggest driver.
Food inflation eased to 1.3%, its lowest reading since September 2021.
The Bank of England held Bank Rate at 3.75% on a 6-3 vote on 30 July. Next decision: 17 September 2026.
What actually changed
Core inflation moved too, though by less. Core CPIH, which strips out energy, food, alcohol and tobacco, rose to 2.9%, up from 2.8%. Core CPI held flat at 2.6%.
So this was not a broad based price surge across the economy. It was an energy story sitting on top of an otherwise cooling picture, roughly what the Bank of England’s rate setters were already braced for.
What pushed the rate up
Housing and household costs made the largest single contribution. Gas prices rose 14.7% in the year to July, largely down to Ofgem’s price cap increase that month. Electricity prices rose 3.6%, against a 3.8% fall over the same period a year earlier. Furniture prices rose 1.0% annually, against a 0.2% fall the year before. Health services added to the total too, up 3.7%.
What’s still pulling it down
Transport worked the other way. The annual rate there slowed from 5.7% to 3.6%, mostly on the back of diesel prices falling 8.8 pence a litre. Food inflation eased to 1.3%, its lowest since September 2021.
Speak to an expert
Wondering what today’s figures mean for your own mortgage or remortgage? Call me on 01425 203055 or email info@htgmortgages.com and I will talk it through with you.
The Bank of England’s dilemma
The Bank held Bank Rate at 3.75% on 30 July, a 6-3 vote. Three members, Megan Greene, Catherine Mann and Huw Pill, wanted to raise it to 4% there and then. The Bank’s own minutes noted that inflation had fallen to 2.6% by that meeting but was expected to rise again later in the year because of energy prices, and flagged that risks to energy prices remained skewed to the upside given ongoing tensions in the Middle East.
Yesterday’s figures are broadly in line with what the Bank was already expecting, so they do not force anyone’s hand on their own. But they do add weight to the argument the three dissenting members were already making.
What this means for mortgage rates
Inflation does not set mortgage rates directly. Fixed rate pricing tends to move with swap rates, which shift on where the market expects Bank Rate to go, so an inflation print that changes those expectations can move fixed rate pricing even before the Bank itself does anything.
I have already seen what a jump like this does in practice. One landlord client’s remortgage moved from 1.32% to 4.21%, about £420 a month more for the same loan. Landlords are usually the ones who feel a rate move first, since so many are remortgaging onto a new rate rather than buying at a fixed point in time.
Whether that means your own remortgage or purchase timing needs rethinking depends entirely on your situation, your current deal and when it ends. That is exactly what a proper conversation covers, rather than a general news piece.
What happens next
The next Bank of England decision is due 17 September 2026. The ONS publishes August’s inflation figures in mid-September, shortly before that meeting, so there is one more data point to come before the Bank decides.
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