UK consumer prices rose unexpectedly between June and July as a surge in air fares lifted the annualised rate of inflation from 2.4% to 2.6% in June.
According to the UK Office for National Statistics, air fares rose by 21.7% between June and July - the biggest June-to-July increase since 2004 and eclipsing the 9.8% rise between the two months last year. Flights to European destinations were the main contributor.
The Bank of England noted the June decline in its August inflation report issued last week, adding: "The near-term outlook is lower than three months ago, reflecting falls in energy prices and some broader-based weakness in price pressures." Partly in anticipation of inflation falling further toward its 2% long-term target, the Bank's August policy meeting held base rates steady at just 0.5%.
After peaking at about $125 per barrel in March, the price of Brent crude - which is closely tracked by jet fuel - declined steadily to below $90 in mid-June and then began a steady rise to around $105 at the end of July. Brent has continued upwards to current levels of around $115, with markets citing renewed fears of Middle East conflict stemming from Iran's nuclear weapons programme.