A new wave of price hikes looms in Britain with a projected jump in inflation

British households are facing renewed pressure due to rising energy costs, with official figures expected this week to reveal inflation rose in July to around 2.9%, compared to 2.6% in June.

This comes after the energy regulator Ofgem raised the price cap on gas and electricity for households by 13% in July. Economists estimate this increase will add about 0.44 percentage points to the inflation rate, although lower petrol and diesel prices may partially offset its impact.

Economists have warned of a resurgence in the cost of living crisis, noting that rising inflation will increase pressure on household budgets and complicate the Bank of England's decisions on interest rates.

The war with Iran and tensions in the Middle East are also causing significant volatility in energy and oil markets, threatening further inflationary pressures. Inflation was approaching the Bank of England's 2% target before the war, but it could rise to 3.2% before the end of the year, according to the Bank of England's forecasts.

Nevertheless, the British economy has shown greater resilience than expected, growing in the first half of 2026 at the fastest pace among the G7 countries, while inflation in June fell from a peak of 3.8% last year.

Andy Burnham's government faces a significant challenge in easing the burden on households and businesses ahead of a difficult autumn budget. Its measures include a reduction in VAT on electricity, expected to save families around £45 a year from October, as well as subsidies for bus fares in England.

In contrast, the Bank of England kept interest rates unchanged last month, but warned that an escalation of the war in the Middle East could push inflation to 4.5% by mid-2027. Investors are expecting two possible interest rate hikes before the end of next year, with the first increase potentially starting in September.

The Swedish krona is the worst performing currency among the G10 currencies

The Swedish krona has had the worst performance among the G10 currencies this year, falling 3.34% against the dollar and trading at 9.53 against the dollar.

The Swedish krona underperformed by 3.14 percentage points against the Bloomberg Dollar Index, according to Bloomberg News on Sunday.

Other weaker currencies in the G10 included the Swiss franc, which fell 2.55% against the US dollar so far this year, and the Japanese yen, which declined 1.64%.