UK inflation accelerated to 2.9% in July from 2.6% in June, driven by a 14.7% jump in gas prices compared with a 7.2% decline a year earlier, the Office for National Statistics reported. The reading matched economists' forecasts and reflected broad upward pressure from housing and household services, alongside furniture costs.
Transport costs provided the largest offsetting drag, tempering the overall increase. The latest figures follow the steepest summer rise in UK energy bills in four years, triggered by escalating tensions in the Middle East. A ceasefire between the US and Iran expired on Monday, lifting Brent crude by 0.65% to $91.61 a barrel on Tuesday.
Separate data released on Tuesday showed a cooling in the UK jobs market, with private sector wage growth decelerating. Analysts suggested this may reduce the urgency for the Bank of England to raise interest rates at its next policy meeting.
Global equity markets reacted to overnight developments, with Japan's Nikkei falling 3.3%, South Korea's Kospi down 5.5% and China's Shenzhen exchange declining 4%, following a semiconductor sell-off on Wall Street.
Later on Tuesday, European Central Bank President Christine Lagarde is scheduled to speak at 8:10 a.m. BST, while the UK private rents and house prices data for July is due at 9:30 a.m. BST. Eurozone inflation figures for July are set for release at 10:00 a.m. BST, followed by the release of the US Federal Reserve's meeting minutes at 7:00 p.m. BST.
