# Surging energy prices push inflation up to highest level since March

By Hal Cook — 2026-08-19

With UK inflation increasing to its highest rate since March, Hal Cook – senior investment analyst at Hargreaves Lansdown – says interest rates could also rise.

He said: “This morning’s inflation print came in at 2.9 per cent, up from June’s 2.6 per cent, with the core reading (excluding food and fuel) slightly higher than expected at 2.6 per cent.

“While inflation remains ahead of the Bank of England’s two per cent target, the case for rate rises is tempered by the wider economic picture.

“Unemployment has edged higher, payroll numbers are falling and vacancies have continued to decline, all pointing to a softer labour market.

“Markets had been pricing a relatively high chance of rates reaching four per cent by the end of 2026.

“The Bank’s latest decision was split 6-3 in favour of holding rates, with three members voting for a hike.

“Governor Andrew Bailey’s press conference had already tempered expectations of a September move.

“This is not simply a UK issue – bond yields have been increasing across the globe in recent days.

“The US-Iran conflict has led to nearly six months of oil price volatility, and higher inflation expectations on top of high levels of government debt have increased yields to levels not seen since the financial crisis in several major economies.”

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