UK Inflation Rate Expected to Edge Higher as Travel and Food Costs Bite
The latest inflation figures are due at 7am this morning, and early forecasts suggest another small but significant rise. Economists predict the inflation rate for July will climb to 3.7%, up from June’s 3.6%.
The culprits? Rising grocery bills and costly summer travel. Air fares in particular are expected to be a major driver, while the surge in hotel prices has been linked, somewhat unusually, to the buzz around Oasis’s recent reunion shows.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted: “We are unlikely to see the Gallagher effect show up in quite the same way as Taylor Swift’s bump to prices in June 2024.
But demand for hotel rooms, beer, bucket hats and Nineties-style gear could be one of the factors that keep inflation heading higher.”
Analysts at Pantheon Macroeconomics estimate that air fares may have jumped by more than 17% between June and July. And it doesn’t stop there, package holidays and train tickets are also tipped to have gone up.
The release of July’s Retail Prices Index (RPI) is another key focus today. While RPI has lost some of its influence in recent years, it still matters hugely when it comes to the cap on regulated rail fares.
The government has yet to confirm how it will set the 2026 fare cap, but this year’s 4.6% increase was pegged one percentage point above last July’s RPI.
If predictions hold true and RPI lands at 4.5%, commuters could be staring down the barrel of a 5.5% hike in regulated train fares. Rail campaigners are already up in arms. Pressure group Railfuture called such an increase “outrageous.”
So, as households continue to battle soaring supermarket prices, the travel industry looks set to add more pressure. For many, the inflation rate creeping higher isn’t just a statistic, it’s a painful reality that’s squeezing wallets harder with every trip, every meal, and every commute.
