UK inflation to rise as summer spending pushes up hotels and airfares
UK inflation is set to have edged higher last month as summer spending pushed up flight and hotel costs, and food prices continue to climb.
One economist said an “Oasis bump” could have contributed to higher accommodation prices in July.
Consumer Prices Index (CPI) inflation is widely expected to have increased in July, from the 3.6 per cent rate recorded in June, when the Office for National Statistics publishes its latest dataset on Wednesday.
Sanjay Raja, senior economist for Deutsche Bank, said he was estimating that price pressures will have pushed CPI to 3.8 per cent last month.
“July inflation will likely see price momentum rise further into uncomfortable territory,” he wrote in a research note.
The school summer holidays are likely to have seen airfares, rail costs, and package holiday prices bumped higher.
Raja also pointed to a possible spike hotel prices which he said could partly be attributed to British band Oasis kicking off their reunion tour in July.
The concerts brought in hoards of fans to arenas in Cardiff, Manchester, London and Edinburgh.
Accommodation prices could rise by as much as nine per cent in July, compared with June, “with the Oasis concerts having a strong impact on Manchester prices alone”, the economist said.
Meanwhile, food prices have been rising in recent months – partly driven by higher ingredients, labour, and regulatory costs.
Annual food price inflation increased for the third month in a row in June, hitting the highest rate since February 2024.
Raja said food inflation is likely to have moved higher in July, but could be “nearing the peak”.
Andrew Goodwin, chief UK economist for Oxford Economics, forecast that CPI inflation will edge up to 3.7 per cent in July.
He said that an increase in fuel prices at the pumps could help push monthly inflation higher.
The Bank of England is forecasting that inflation will increase further this year and peak at about four per cent in September, before easing throughout the next two years.
The central bank said accelerating food and energy prices have been key drivers in the uptick in inflation.
By Anna Wise, PA Business Reporter