Rachel Clun
Business reporter

Inflation rose to 3.8% in the year to July, the highest since January 2024, the latest figures from the Office for National Statistics (ONS) show.

While the inflation figure was slightly higher than experts expected, the Bank of England predicts it will reach a peak of 4% in September before beginning to fall back towards the Bank’s 2% target.

This increase was mainly driven by soaring air fares - which jumped by 30.2% - driven by higher school holiday prices - here's why. Meanwhile, food price inflation rose to 4.9% driven by higher prices for goods including beef, instant coffee and orange juice.

In the past five years to July, the price of food and non-alcoholic drinks rose by around 37%.

BBC's Colletta Smith says households on lower incomes will be hit harder, and deputy economics editor Dharshini David says food price rises underpin concerns it could take a while for inflation to fall to 2%.

Chancellor Rachel Reeves said there was “more to do to ease the cost of living”, while shadow chancellor Mel Stride said the data was “deeply worrying for families”.

In Manchester, a chocolate shop owner tells the BBC that businesses are having to come up with "innovative" solutions to cut costs, while a farmer in Cheshire warns a poor harvest spells bad news for the price of eggs and meat.

We're now ending our live coverage. Before we go, here’s a reminder of what you need to know from this morning. And remember, we'll have more inflation data from the ONS next month.

• Read more about today’s figures in our main story
• Need an inflation refresher? Check out our explainer

Tommy Lumby
BBC business data journalist

The headline inflation figure for food and drink was 4.9% in the year to July 2025.

But it’s always worth remembering that this only tells you how much things have changed over the last year.

We can also look at how much prices have risen over a longer period to get a sense of the cumulative effects of the cost of living crisis.

In the five years to July, the price of food and non-alcoholic drinks rose by around 37%, as the chart below shows.

Image source, BBC News

Luke Wilson
Business reporter

Image source, BBC / Lewis Wilson

Cheshire farmer Lewis Clare tells me he is not surprised by the higher food prices in today's figures.

"Prices of lamb have gone through the roof in the last couple of years," he says. "I'm buying them at £150 a piece, which is 50% up on what I was paying a few years ago...the price of beef is up as well."

The problem is things take months to feed through. Lewis explains what he is seeing now means the rest of us can expect food to get even more expensive.

"It's not a good harvest this year," he warns.

Lewis adds: "If harvests are poor, that means your feed prices are going to be going up, which means the price of your meat is going to be going up, the price of your eggs is going to be going up."

Peter Ruddick
Reporting from northern Manchester

I've been speaking to John Slattery, owner of Slattery's three-storey bakery and chocolate shop, who says there has been a "big hike" in chocolate prices in the last two years.

He adds that the business tries to "absorb as much as we can and pass on as little as we can, but inevitably that cost has to be passed on to our very loyal customers."

In order to cost save, he tells me, John has had to come up with creative solutions. "This week in fact, we’ve made mincemeat for Christmas, so we’ve made a ton of mincemeat which we would normally purchase in and that has been a cost saving," he says.

When asked if suppliers have explained why prices are going up, John says it is due to "overheads, it’s electricity, it’s water, it’s rates, it’s national insurance, it’s all the wages".

"Everybody is in the same boat, the consumers, our workers and ourselves, we’re all in the same boat, because overheads are rising and that has to be passed on in one way or another.”

Emer Moreau
BBC News

Image source, Getty Images

Fast food restaurants have seen a 6% drop in customers over three months to mid-July.

Grocery price inflation fell marginally from July to August, but consumers are still trying to make savings due to the high cost of everyday essentials, new data from market researcher Worldpanel by Numerator finds.

People are spending less on fast food this summer but are replacing those meals with smaller treats from the supermarket, they add.

But shoppers were still buying branded groceries instead of swapping for cheaper, own-brand alternatives.

• More on new consumer trends here, including a rise in coffee ship visits

Colletta Smith
Cost of living correspondent

Jane Matthews, operations director of the Ice Cream Farm in Cheshire, says her business is constantly having to absorb the rising costs of produce, services and staff.

“As a business ourselves we have a lot of price pressure coming down on us, but we’re also very conscious that our customers are under the exact same pressure,” she says.

Jane says inflation continues to take a toll: “It’s tough, it’s an ongoing battle, you cannot rest back. A lot of the costs that are imposed on us are out of our control.”

The farm has seen fewer visitors than usual this summer, which Jane puts down to customers feeling the pinch.

“Every penny counts - and you can tell that,” she says.

Image source, EPA/Shutterstock

As we've been reporting, the Office for National Statistics (ONS) says the main driver for inflation was higher air fares, which ONS chief economist Grant Fitzner says was "likely due to the timing of this year's school holidays".

Fitzner adds that the increase of 30.2% was the biggest jump for that period since the collection of monthly data began in 2001. This rise in July 2025 is compared to a rise of 13.3% over the same period in 2024.

When data was recorded on air fare prices last year it was during the school term, the ONS explains in its report.

"Whereas returning European flights were during the school holidays in 2025, which may have made these flights more expensive," the ONS says in its report.

Danni Hewson, head of financial analysis at AJ Bell says "parents who saved for months to take the family on a post-school break will have had first-hand experience of one of the main drivers of July’s larger than expected jump.

“It always feels unfair when you watch air fares shoot up on the first day of parents’ six-week summer window and it’s notable that with the holidays falling earlier in July this year, the cost of a flight for a week in the sun would have been subject to that school holiday premium and reflected in this month’s figures."

Luke Wilson
Business reporter

Image source, BBC News

Food prices are one of the biggest headaches for households on a budget. Today’s figures show the pressure isn’t easing much.

It turns out it’s even worse for some restaurants.

We’ve been talking to Peter Kinsella, co-founder of Lunya Restaurants. He told us his overall costs are about 9% higher.

But for things like butter, cheese and milk the increases are eye-watering. "Dairy, which in a restaurant you use absolutely tonnes of, is way, way above 4% - it's running at close to 15%,” he told me.

And that’s not all. “That is just from the last month, not year-on-year,” he revealed.

So, what do businesses like Lunya do next? Peter told me that because of three years of trying to reduce costs, there's "nothing left to cut anymore".

"We won't cut the quality of our food, because we would go out of business if we did, so we're employing fewer people, and we're continuing to try and have mild menu price rises," he said.

Image source, Getty Images

The increase in inflation to 3.8% is “particularly concerning for families”, the Resolution Foundation says.

The think tank has pointed out that rise was driven in part by higher costs for essentials such as fuel, energy and food.

On food prices, which rose to 4.9% in the year to July from 4.5% in the year to June, the Resolution foundation said those increases were concerning off the back of a 32% increase in food bank use, compared to 2021-22.

Research director James Smith said there had been a “worrying increase in the inflation rate of essentials”.

“The rising cost of food is particularly concerning for families as it comes in the wake of a period of steep increases in the cost of essentials and rising food-bank use,” he said in a statement.

Smith said it was also bad news for people with home loans, as it could delay any future interest rate cuts.

While the Bank of England expects inflation to peak at 4% in the year to September, one economist has warned it could go higher.

Suren Thiru, the economics director at the Institute of Chartered Accountants in England and Wales, says in a statement: “These figures underscore the intensifying financial squeeze on households and businesses as a summer holiday spike in food and flight costs helped push inflation uncomfortably higher, despite July’s drop in energy bills.”

Thiru says “spiralling business costs” and higher food prices “may mean that inflation peaks higher than the Bank of England’s prediction of 4%”.

He adds that inflation should begin to slow in Autumn.

Rachel Flynn
Live reporter

It's been just over an hour since the Office for National Statistics released this month's inflation figures - which revealed a slightly higher than expected rise to 3.8% - so let's get you up to speed:

What does it mean?

The 3.8% rise in inflation over the 12 months to July this year is the largest increase in inflation since January 2024.

It is only slightly higher than the Bank of England's forecast for 3.76%, and inflation is expected to reach 4% in September before beginning to fall.

As a reminder, inflation measures the pace of price increases in goods and services over time. The main indicator of inflation is the Consumer Prices Index which is updated each month.

Why has it risen?

The ONS says the main driver of inflation was higher air fares, likely due to the timing of this year’s school holidays.

Meanwhile, the cost of food has continued to rise for the fourth month in a row, making the rate the highest it has been since February 2024. Beef, sugar, chocolate, instant coffee and fruit juices have seen sharp price rises since June 2025.

What does the government say?

Chancellor Rachel Reeves says there's "more to do to ease the cost of living," while shadow chancellor Mel Stride calls the figure "deeply worrying for families".

The government also says that rail fare cost rises for 2026 will not be confirmed today.

• Check out what this all means for your money, and you can also read our simple guide to inflation

Colletta Smith
Cost of living correspondent

The cost of almost everything we buy has been creeping up again over the last year, adding pressure on a government who promised to make life better for working families.

While nothing feels cheap right now, buying food is particularly painful - up 4.9% compared to last year - and because that’s not spending that people can easily cut back on, it hits households on lower incomes harder.

The same is true for petrol which rose by 2p compared with last month. Diesel was almost 3p a litre up compared with a fall of 1.1p per litre in July 2024. That not only adds costs on all business, and pushes up prices all round, but is often a cost people need to spend to get to work, school, and appointments.

The cost of gas and electricity did fall a fraction at the start of July, but for most people any savings have been swallowed up by increasing bills elsewhere.

Peter Ruddick
Business reporter

Inflation – the way we measure the rising cost-of-living – is up. Again.

Some of this is statistical, but some of this will be causing real problems. One of the biggest issues for struggling households is the cost of food.

Food price inflation rose for the fourth month in a row. The rate is the highest it has been since February last year.

The main culprits? Beef, sugar, chocolate, instant coffee and fruit juices.

The reasons? There are lots of them. From the changing climate and taxes on businesses to trade problems not helped by the US President.

But these numbers show the impact will be significant on both the dining table and food businesses.

Image source, BBC News

BBC Breakfast presenter Ben Boulos explains what the 3.8% figure means for your money:

Simon Browning
Transport correspondent

For almost 30 years, regulated rail fares have risen in line with July’s Retail Price Index (RPI) inflation – being capped at 1% above or below RPI.

Last year, July 2024 RPI was 3.6%, so regulated rail fares rose by 4.5% in spring 2025, slightly under the cap of 4.6%.

But the government has told the BBC it will not confirm today how much fares will rise in 2026, or if July’s RPI figure will be used for the fare increase.

There have been two recent exceptions when the template was ignored and ministers stepped in to limit ticket price rises, in 2023 and 2024, due to economic periods of high inflation.

Last October, the chancellor revealed the price increases for regulated fares in 2025 during her first Budget.

We could expect to see a similar scenario this autumn, as the Treasury will currently be trying to balance the projected revenue needed to run the railways, versus the fare increases passengers need to pay to use them.

Image source, PA Media

We've also seen a statement from shadow chancellor Mel Stride, who blames the government for today’s slightly higher than expected result.

“This morning’s news that inflation has risen even higher than the 2% target is deeply worrying for families,” he says.

“Labour’s choices to tax jobs and ramp up borrowing are pushing up costs and stoking inflation – making everyday essentials more expensive.

"And with leading economists warning that the Chancellor has blown a colossal black hole in the public finances, families and businesses are bracing for yet more pain come the Autumn Budget.”

Inflation concerns lingerpublished at 07:20 BST 20 August

07:20 BST 20 August

Dharshini David
Deputy economics editor

Inflation was a touch higher than analysts expected last month, although in line with the Bank of England’s predictions.

There were some distortions - the rise in air fares was boosted as the collection day for data this year overlapped with the start of the school holidays in a way they didn’t last year.

But there are factors that will underpin concerns that inflation will take a while to get back down to the 2% target.

Those include the rise in food prices but also the persistence of inflation in services.

The Bank of England has recently highlighted that the rise in employers' staffing costs, due to increases in minimum wages and National Insurance are most likely playing a part.

And as inflation concerns linger, economists increasingly think we may not see another rate cut this year.

Image source, Reuters

We've just heard from Chancellor Rachel Reeves who says there is "more to do to ease the cost of living".

In a statement, she said: “We have taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government, but there’s more to do to ease the cost of living.

"That’s why we’ve raised the minimum wage, extended the £3 bus fare cap, expanded free school meals to over half a million more children, and are rolling out free breakfast clubs for every child in the country.

"Through our Plan for Change we’re going further and faster to put more money in people's pockets.”

The 3.8% rise in inflation over the 12 months to July this year is the largest increase in inflation since January 2024.

It's worth noting that it's only slightly higher than the Bank of England's forecast for 3.76%, and inflation is expected to reach 4% in September before beginning to fall.

Image source, Getty Images

The ONS’s chief economist Grant Fitzner says the cost of food has continued to rise, “with items such as coffee, fresh orange juice, meat and chocolate seeing the biggest rises".

Inflation for food and non-alcoholic beverages was 4.9% in the year to July, up from 4.5% in the year to June, according to the ONS.

It’s the fourth consecutive increase in food inflation and the highest rate since February 2024.