"What actually matters is what this does to the Bank of England's next move, because that's what changes the mortgage deals available."
- Ben Thompson - Mortgage Advice Bureau
The latest data from the Office for National Statistics (ONS) has found that Consumer Prices Index (CPI) inflation rose by 2.9% in the 12 months to July 2026, following June’s 15-month low of 2.6%.
This marks the highest annual inflation rate in four months, with the leading causes being housing and household services, which rose to 4.1% compared to 2.7% in June, driven by what the ONS described as the largest jump in gas and electricity bills in almost four years.
The Consumer Prices Index including owner occupiers’ housing costs (CPIH) increased from 2.8% in June to 3.1% in July.
Ben Thompson, director of home moving strategy, Mortgage Advice Bureau, said: "After last month's surprise fall, an inflation bounce-back was always likely. Fuel prices have been climbing again since the last reading, so today's rise doesn’t really tell us anything we didn’t expect. What actually matters is what this does to the Bank of England's next move, because that's what changes the mortgage deals available.
"First-time buyers should know that lenders don't price fixed deals against today's rate - they price them against where they expect rates to go next. That's why inflation data can impact what’s available before the Bank does anything at all.
"The read is similar for anyone remortgaging, but the stakes are higher. If your current deal ends in the next few months, lenders typically start repricing in the run-up to a Bank decision, not after it. So, waiting to see what happens at the next base rate announcement in September could mean missing the deals that were only available beforehand.
"If you're moving home, none of this should change your plans. However, it's worth checking your numbers against a rate that's a little higher than you've budgeted for, so a shift in borrowing costs doesn't catch you out between now and completion."
Sarah Pennells, consumer finance expert at Royal London, commented: "The increase in the inflation rate is not unexpected, following the 13% rise in the energy price cap, which kicked in at the start of July. While the VAT reduction will lower the average annual household energy bill by around £44 from October, experts expect the overall energy price cap to rise again. We’ll find out how much by in coming days.
"The outlook will be disappointing for people who are already struggling with the cost of everyday essentials. Our research shows that three in ten adults are financially fragile, with one in eight having less than £50 left over once they’ve paid for the basics, highlighting just how little room many people have to absorb further price rises."
