The rate of inflation has risen for the first time this year, official figures from the Office of National statistics (ONS) reveal.
Overall prices rose by 2.2% in the year to July, slightly above the Bank of England’s target of 2% where the rate had been since May.
The latest figures mean that prices are now rising faster across the UK than in previous months, but still at a slower pace than in 2022 and 2023 when the public and businesses were hit by higher energy and food bills.
Prices fell by 0.2% in July, helped by cheaper hotel stays, however this was smaller than the 0.4% decrease in prices in July 2023, when energy bills dropped sharply, meaning that the headline rate of inflation increased.
The ONS’s chief economist, Grant Fitzner, said:
“Inflation ticked up a little in July as although domestic energy costs fell, they fell by less than a year ago. This was partially offset by hotel costs, which fell in July after strong growth in June.”
Michael Kill, CEO of the Night Time Industries Association said:
“We have observed the slight uptick in inflation from 2% to 2.2% in July, but for our sector, the impact will be minimal. The real focus for night-time economy businesses remains firmly on the upcoming Autumn Budget. With a growing government narrative around the voids in public funding that are fuelling inevitable tax increases by the Chancellor on the 30th October. The potential for further tax increases, could place an additional burden on businesses still recovering from the challenges of recent years. The Autumn Budget must not lose sight of the fragility of our sector, and prioritise the continuation of support for our sector, ensuring that we are not left behind during this critical period.”
The ONS figures also reveal a 6.4% monthly fall in hotel prices, Zen Valli, managing director of EMEA for hotel technology specialist RMS Cloud said: “Hotel prices may still be giving the Bank of England a headache when looking at the annual trend but there’s been a complete about turn in the past month. They were blamed for a lot of the upward pressure on inflation in June but fast forward a month and they’re the reason inflation isn’t significantly higher than it is.
“People talk about surge pricing, or what’s known in the industry as dynamic pricing, fuelling price rises but this month’s data is a lesson in how that isn’t a one-way street and you’ve got to take the market with you. Hotels appeal to both consumer and business travellers but both can be very price sensitive, and it’s significant that this retreat in the trajectory of prices comes at the start of the peak holiday season. The spending power of holidaymakers appears to now be softening.
“Major online travel agents had revealed strong demand this year for international travel but it wouldn’t be a surprise to see some further cooling off in the coming months. Last year’s inflationary peak has been unwinding for a while now after a period in which hotels were desperate to raise prices where they could to offset a post-pandemic upswing in operating and labour costs.”
