PwC comments on ONS CPI data - August 2026

Commenting on the latest Office of National Statistics Consumer Price Index July 2026 data, Adam Deasy, Economist at PwC UK, says:

“July’s inflation increase is more related to mechanics than momentum; the scheduled Ofgem Energy Price Cap increase drove most of the jump. The annual rate of core CPI, which strips out volatile food and energy prices, was unchanged, continuing a trend where domestic inflationary pressures have been easing or more muted, supported by a softer labour market and faltering wage growth.

“However, external pressures may be building again. The conflict in the Middle East remains unresolved, while extreme weather - from the UK’s recent heatwaves to the risk of a strong El Niño - could add pressure on food prices down the line. 

“As ever, the Bank of England is watching for second-round effects. Evidence from the July Monetary Policy Report suggests that these are yet to materialise meaningfully, but lags in pass-through mean this is an early indication rather than a clean bill of health. These factors interact; the longer external costs stay elevated, the more likely a temporary shock is to become embedded.

“Inflation is still on a bumpy path back to target. July’s increase was largely expected, but it is a reminder both that the full pass through of an energy price shock still looms, and that further shocks may yet knock the journey off course.”