UK Inflation Hits 2.9% as Gas Prices Rise Four Times Faster Than Electricity
published 19 August 2026
Official figures published this morning show household gas prices up 14.7% over the year, against 3.6% for electricity.
That four-to-one gap sits behind an inflation rate of 2.9%, and it makes clear which half of the typical energy bill is doing the damage.
With a further rise forecast for 1 October, and wholesale prices now tied to a conflict several thousand miles away, the households least exposed this winter will be the ones that reduced their gas demand over the summer.
Energy’s burden on inflation
UK inflation rose to 2.9% in the 12 months to July 2026, up from 2.6% in June, according to the Office for National Statistics. It is the highest rate since March.
Energy is the reason. Housing and household services – the category that contains gas and electricity – jumped to an annual rate of 4.6%, up from 1.2% a month earlier.
Most other categories behaved themselves. Food inflation fell to 1.3%, its lowest for close to five years. Motor fuel inflation eased to 15.5%, down from 21.3% in June.
Take energy out of the basket and this would have been an unremarkable set of numbers. In reality, it was not, and the explanation sits in a single line of the ONS release.
Gas rose 14.7%. Electricity rose 3.6%
Over the 12 months to July, domestic gas prices rose 14.7% – the sharpest increase since October 2022. Electricity prices rose 3.6% over the same period. A year earlier, both were falling: gas by 7.2%, electricity by 3.8%.
That gap tells you more about your own bill than the headline inflation rate does. If you heat your home and your water with gas, you have absorbed a rise roughly four times steeper than a neighbour who has already electrified.
The immediate trigger was Ofgem’s price cap, which rose by 13% on 1 July and added £221 to the annual bill of a typical dual-fuel household. But the cap moved because wholesale gas moved.
Why gas, and why now
The US-Iran conflict that began in February has restricted global energy supplies, with effective closures of the Strait of Hormuz, one of the busiest routes for energy cargoes anywhere in the world.
Cornwall Insight points to several other pressures arriving at once: European gas storage sitting low ahead of winter, extended outages at Norwegian offshore production, and strong competition for LNG cargoes from Asian buyers. The European heatwave has compounded it, lifting gas demand at power stations as cooling loads climb.
Dr Craig Lowrey, principal consultant at Cornwall Insight, described the increase as driven by international conflict rather than domestic policy; a reminder, he said, that “our energy bills remain tied to events thousands of miles away”.
The October rise is already on the board
Cornwall Insight published its latest price cap forecast this morning, within hours of the inflation figures. It expects the cap to rise by around 4% on 1 October, taking the typical annual dual-fuel bill to £1,729.
Just one point to highlight on that number, however. Ofgem changed its typical consumption values in July, from 2,700 kWh of electricity and 11,500 kWh of gas a year to 2,500 kWh and 9,500 kWh.
The £1,729 forecast is calculated on the new, lower basis, so it cannot be compared directly with the cap figures you may remember from 2023 and 2024. On the previous basis the same forecast equates to £1,941, which would be the highest level since July 2023.
The cut in VAT on domestic electricity from 1 October takes some of the edge off. It does not touch gas, and it does not touch the wholesale market.
The cost that does not appear on your energy bill
There is a second factor in play here as well. At 2.9%, inflation remains well above the Bank of England’s 2% target, and KPMG expects it to peak at around 3.5% over the coming months.
Capital Economics expects the Bank to hold its key rate at 3.75% for the rest of this year and cut to 3.00% next year, with inflation back at target by the end of 2027, provided energy prices do not climb further.
For anyone with a mortgage coming up for renewal, that is the part worth noting. The price of imported gas is now reaching households twice: once through the energy direct debit, and again through the cost of borrowing.
What actually reduces your exposure to gas
It is worth being straight about this. Electrifying a home does not disconnect it from gas prices altogether, because gas-fired power stations still set the wholesale electricity price for a large share of the year.
What electrification does is shrink the number of units you buy at a price the market controls. Three mechanisms do that work.
Efficiency – fewer units for the same warmth
Using Ofgem’s July-September unit rates of 7.33p per kWh for gas and 26.11p per kWh for electricity, a gas boiler running at around 90% seasonal efficiency delivers a usable kilowatt-hour of heat for roughly 8.1p.
An air source heat pump with a seasonal performance factor of 3.5 delivers the same kilowatt-hour for roughly 7.5p. These are illustrative calculations from published unit rates and assumed efficiencies, not a quoted saving for any particular property.
On standard rates, a well-designed heat pump can provide you with savings when compared to gas. Extra gains can come from what you pair it with: a dedicated heat pump tariff, solar generation, or both. Our heat pump savings calculator runs the comparison on your own consumption rather than a national average.
Generation – units no market gets to price
Every kilowatt-hour produced by solar panels on your own roof is a kilowatt-hour that no wholesale market gets to price.
It’s the only part of a household’s supply that is genuinely insulated from the Strait of Hormuz. Our solar savings calculator will give you a first estimate of what a specific roof could produce.
Timing – buying when it is cheap
A home battery lets you import electricity when it is cheap and use it when it is expensive, and it stores surplus solar rather than exporting it at a lower rate.
Paired with the right tariff it changes what you pay for the units you do import, and if you also run an electric car, an EV charger on the same overnight window compounds the effect. Our battery storage calculator will size a system against your usage.
Cooling belongs in the same conversation. Modern air conditioning runs on electricity – the slower-inflating of the two fuels – and it can run on electricity you are generating yourself via solar panels.
What to do between now and 1 October
Four things are worth doing in the next six weeks.
Check whether your tariff still fits the way you use energy. Fixed deals, heat pump tariffs and EV tariffs price very differently, and the right answer changes once you have solar or storage. Our smart tariff finder compares them against your own figures.
Take a meter reading on or close to 30 September, so that usage before the new rates is billed at the old ones.
Check what grant support you qualify for. Support for low-carbon heating has changed more than once this year, and our grant and incentive eligibility checker will tell you where you stand.
If you are weighing up more than one measure, model the property as a whole rather than one product at a time. Solar, storage and heating interact, and the numbers for each look different when they are installed together. That is what our whole home energy planner is for.
Our view at Infinity Energy Services
Today’s figures are a useful corrective to the idea that the energy crisis ended in 2023. What has changed is its shape. Electricity inflation is running a little above the headline rate. Gas inflation is running at five times it.
Households that still rely on gas for heat and hot water are carrying all of that exposure. Households that have electrified, generate some of their own power and store it, are carrying a fraction of it. That gap is not going to close on its own while the Strait of Hormuz stays contested and European storage stays thin.
None of which makes a heat pump or a solar array right for every property. Fabric, layout, roof orientation and the way a household actually uses energy all change the answer, and anyone who tells you otherwise is selling rather than advising.
But the direction of travel in today’s data is not ambiguous, and the households best placed to ride out this winter will be the ones that made their decisions in the summer.
Next steps
If you would like to know what your own property could realistically do in terms of energy savings, our team will look at your bills, your building and your usage before recommending anything.
Get in touch with Infinity Energy Services or call 0800 909 8882 to arrange a no-obligation consultation.