CPI inflation rises to 2.9%

CPI inflation rises to 2.9%

19 Aug 2026

Josh Pilley, Head of Multi-Asset Research at XPS Group, commented:

“Today’s inflation data shows year-on-year CPI in the UK rose from 2.6% in June to 2.9% in July, broadly in line with market expectations.

The 13% increase to Ofgem’s energy price cap effective from 1 July was a key contributor to rising inflation, ending the temporary protection households had from rising global energy prices. While the Government is pursuing cost-of-living measures, global energy prices are likely to remain a key driver of inflation for the rest of the year.

Despite the inflationary headwinds, DB scheme funding continues to be supported by an upwards trend in nominal gilt yields. According to our XPS DB:UK analysis, aggregate surplus as of 14 August 2026 remains well above £240 billion.

For members, the impact of inflation caps within DB scheme benefit structures could mean some retirees see their real income eroded even as headline funding levels remain strong.

Trustees and sponsors should closely monitor their scheme’s risk exposures to ensure that hedging strategies remain robust against potential future volatility in both gilts and inflation markets.”