The rate of inflation in the UK has risen to 2.2% in the 12 months up to July. Official figures from ONS (Office for National Statistics) show it's up from 2% in June. Meaning the price of things like food, household bills and fuel are rising a bit faster.
Inflation had been consistent at 2% for May and June, so this rise isn’t great news, but it is expected to reduce in future as the cost of energy and fuel has been dropping in recent months.
The Bank of England’s target is to keep inflation at 2%, and they do this by increasing or decreasing the interest rate that they provide banks for keeping their money with the Bank of England, and this has a knock on effect on things like mortgage and savings rates.
The Bank of England rate was reduced to 5% from 5.25% recently, as inflation was cooling, so might mean slower than hoped rate cuts while inflation remains above 2%.
Nuts About Money tip: If you’ve got savings, make sure they’re getting a top interest rate – it’s easy to switch. Check our best savings accounts for our top recommendations.
