Prices in the UK rose even faster than expected last month, reaching the highest level in 18 months, according to official figures.

Inflation hit 3.8% in July, data from the Office for National Statistics (ONS) showed.

Not since January 2024 have prices risen as fast.

It’s up from 3.6% in June and is anticipated to reach 4% by the end of the year.

Economists polled by Reuters had only been expecting a 3.6% rise.

More unwelcome news is contained elsewhere in the ONS’s data.

Train tickets

Another metric of inflation used by government to set rail fare rises, the retail price index, came in at 4.8%.

It means train tickets could go up 5.8% next year, depending on how the government calculate the increase.

This year, the rise was one percentage point above the retail price index measure of inflation.

These regulated fares account for about half of rail journeys.

Why?

Inflation rose so much due to higher transport costs, mostly from air fares due to the school holidays, as well as from fuel and food.

Petrol and diesel were more expensive in July this year compared to last, which made journeys pricier.

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Coffee, orange juice, meat and chocolate were among the items with the highest price rises, the ONS said. It contributed to food inflation of 4.9%.

What does it mean for interest rates?

Another measure of inflation that’s closely watched by rate setters at the Bank of England rose above expectations.

Core inflation – which measures price rises without volatile food and energy costs – rose to 3.8%. It had been forecast to remain at 3.7%.

It’s not good news for interest rates and for anyone looking to refix their mortgage, as the Bank’s target for inflation is 2%.

Whether or not there’ll be another cut this year is hotly debated, but at present, traders expect no more this year, according to data from the London Stock Exchange Group (LSEG).

Economists at Capital Economics anticipate a cut in November, while the National Institute of Economic and Social Research (NIESR) expect one more by the end of the year.

Analysts at Pantheon Macroeconomics forecast no change in the base interest rate.

Political response

Responding to the news, Chancellor Rachel Reeves said:

“We have taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government, but there’s more to do to ease the cost of living.”

Shadow chancellor and Conservative Mel Stride said, “Labour’s choices to tax jobs and ramp up borrowing are pushing up costs and stoking inflation. And the Chancellor is gearing up to do it all over again in the autumn.”

An AI start-up which claims to act as an ‘immune system’ for software has landed $17m (£12.6m) in initial funding from backers including the ventures arm of Alphabet-owned Google.

Sky News has learnt that Phoebe, which uses AI agents to continuously monitor and respond to live system data in order to identify and fix software glitches, will announce this week one of the largest seed funding rounds for a UK-based company this year.

The funding is led by GV – formerly Google Ventures – and Cherry Ventures, and will be announced to coincide with the public launch of Phoebe’s platform.

It is expected to be announced publicly on Thursday.

Phoebe was founded by Matt Henderson and James Summerfield, the former chief executive and chief information officer of Stripe Europe, last year.

The duo sold their first start-up, Rangespan, to Google a decade earlier.

Their latest venture is motivated by data suggesting that the world’s roughly 40 million software developers spend up to 30% of their time reacting to bugs and errors.

Financial losses to companies from software outages are said to have reached $400bn globally last year, according to the company.

Phoebe’s swarms of AI agents sift through siloed data to identify errors in real time, which it says reduces the time it takes to resolve them by up to 90%.

“High-severity incidents can make or break big customer relationships, and numerous smaller problems drain engineering productivity,” Mr Henderson said.

“Software monitoring tools exist, but they aren’t very intelligent and require people to spend a lot of time working out what is wrong and what to do about it.”

The backing from blue-chip investors such as GV and Cherry Ventures underlines the level of interest in AI-powered software remediation businesses.

Roni Hiranand, an executive at GV, said: “AI has transformed how code is written, but software reliability has not kept pace.

“Phoebe is building a missing layer of contextual intelligence that can help both human and AI engineers avoid software failures.

“We love the boldness of the team’s vision for a software immune system that pre-emptively fixes problems.”

Phoebe has signed up customers including Trainline, the rail booking app.

Jay Davies, head of engineering for reliability and operations at Trainline, said Phoebe had “already had a real impact on how we investigate and remediate incidents”.

“Work that used to take us hours to piece together can now take minutes and that matters when you’re running critical services at our scale.”

Paul Weller is suing his former accountants after they stopped working with him after he alleged Israel was committing genocide in Gaza, according to a legal letter.

The former frontman of The Jam, 67, has filed a discrimination claim against Harris and Trotter after the firm ended their professional relationship.

Lawyers for Weller say the singer-songwriter was told in March that the accountants and tax advisers would no longer work with him or his companies.

According to the letter, which was seen by the PA news agency, a WhatsApp message from a partner at the firm said: “It’s well known what your political views are in relation to Israel, the Palestinians and Gaza, but we as a firm are offended at the assertions that Israel is committing any type of genocide.

“Everyone is entitled to their own views, but you are alleging such anti-Israel views that we as a firm with Jewish roots and many Jewish partners are not prepared to work with someone who holds these views.”

Israel has vehemently denied claims of genocide.

But lawyers for Weller claim by ending their services, the firm unlawfully discriminated against the singer’s protected philosophical beliefs, including that Israel is committing genocide in Gaza and Palestine should be recognised as a nation state.

Weller said: “I’ve always spoken out against injustice, whether it’s apartheid, ethnic cleansing, or genocide. What’s happening to the Palestinian people in Gaza is a humanitarian catastrophe.

“I believe they have the right to self-determination, dignity, and protection under international law, and I believe Israel is committing genocide against them. That must be called out.

“Silencing those who speak this truth is not just censorship – it’s complicity.

“I’m taking legal action not just for myself, but to help ensure that others are not similarly punished for expressing their beliefs about the rights of the Palestinian people.”

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The legal letter says Weller will donate any damages he receives to humanitarian relief efforts in Gaza.

Cormac McDonough, a lawyer at Hodge Jones and Allen, which is representing Weller, said his case “reflects a wider pattern of attempts to silence artists and public figures who speak out in support of Palestinian rights”.

Mr McDonough added: “Within the music industry especially, we are seeing increasing efforts to marginalise those who express solidarity with the people of Gaza.”

Sky News has contacted Harris and Trotter for comment.