Inflation rose for the first time since March, reaching 2.9% in the year to July, in the first price figures published under Andy Burnham's premiership. The Office for National Statistics said the increase was driven largely by July's rise in the energy price cap, as a YouGov poll put Reform UK narrowly back ahead of Labour and gilt yields held near 5%. This is UKFCP's Wednesday 24 hours in politics round-up.

Parliament remains in summer recess, with no divisions, ministerial statements or Commons business in the window, and Burnham's government is a month old, having taken office on 20 July. The Budget is due in October, with Ofgem's next price cap decision landing before MPs return.

Inflation jumps to 2.9% on energy bills

The ONS said consumer prices rose 2.9% in the 12 months to July, up from 2.6% in June — the first increase in the annual rate since March. Gas prices rose 14.7%, the largest increase since October 2022, after Ofgem raised the price cap by 13% on 1 July, adding £221 to a typical annual bill. Services inflation, watched closely by the Bank of England, eased to 3.4% from 3.6%.

Chancellor John Healey blamed the conflict in Iran, saying "Iran war inflation continues to impact prices here at home, but Britain's economy is resilient", and pointed to cuts to VAT on electricity bills and the £2 bus fare cap. UK inflation is now running above France, at 2.4%, and Germany, at 2.8%.

Stride turns the figures on the Budget

Shadow chancellor Sir Mel Stride used the release to open a direct line of attack on the autumn Budget, tying rising prices to tax decisions Burnham has declined to rule out.

"Labour's tax rises and business bashing have driven the cost of living higher and higher, yet Andy Burnham refuses to rule out yet more tax hikes at the Budget," Stride said.

He added that inflation had now been above the 2% target for 22 consecutive months. Analysts said the figures were unlikely to shift the Bank of England when it meets in September; markets continue to price at least one rate rise this year, though most economists expect no change.

Gilt yields ease but Budget headroom under pressure

The inflation print landed into a hostile bond market. The 10-year gilt yield eased to around 5.05% as investors also digested labour market data, with traders trimming bets on a rate rise before year-end. Earlier in the week the yield had risen above 5%, its highest since 23 July, amid renewed concern over the Iran conflict and higher oil prices.

Unemployment unexpectedly held at 4.9%, payroll employment fell by 86,000 year on year and regular earnings growth was 3.5%. The Institute for Fiscal Studies has noted that 30-year gilt yields reached about 5.7% before the summer, their highest since 1998, leaving what it called difficult choices on tax, borrowing and spending.

YouGov puts Reform two points ahead

YouGov's voting intention for The Times and Sky News, with fieldwork on 16 and 17 August, put Reform UK on 24%, Labour on 22%, the Conservatives on 19%, the Greens on 13% and the Liberal Democrats on 12%. The pollster said all parties were within the margin of error of its previous survey.

YouGov noted that Labour has polled between 21% and 24% in its tracker in the first month of Burnham's premiership, against 16% to 20% over the final six months of Keir Starmer's leadership. Opinium, polling over an overlapping period, had Labour two points ahead of Reform and recorded Burnham with a net approval of +11, down five points on the week.

Also on Wednesday

Ofgem announces the energy price cap for October to December on 26 August, the next test of the household bills pressure behind July's inflation figure.