Jump in energy bills drives UK inflation to highest rate for four months

ONS prices director Mike Hardie said furniture prices, which fell by less than usual for that time of year, added to the upward pressure on inflation, and said clothing was also not being discounted as much.

Chancellor John Healey said the Iran war was continuing to affect prices in the UK, but insisted Britain's economy was resilient.

"We have cut VAT on electricity bills and capped bus fares at £2 - to give breathing space to those feeling the strain," he said.

"There is more to do to restore hope and build a stronger economy where prosperity is shared more fairly across Britain."

KPMG's chief economist Yael Selfin said July marked the start of a gradual rise in inflation, though she said Wednesday's figure was not enough to spur change in the Bank of England's interest-rate setting decisions.

But Selfin added that energy-related costs were expected to push inflation higher over the coming months to a peak of about 3.5%.

Shadow chancellor Mel Stride said the country was unprepared for global shocks due to Labour's "mismanagement", leaving ordinary people "paying the price".