British inflation hit its highest in 18 months in July when it increased to 3.8% from 3.6%, official data showed on Wednesday, once again leaving the country with the fastest rate of price increases among the world's largest rich economies.

While a post-pandemic burst of inflation has abated across much of the developed world, the UK is still stuck with the highest price growth among big Western economies.

The Bank of England currently expects inflation to hit 4% in September, the all-important month for pensioners. Wage growth is currently slightly higher than this at 4.6% (including bonuses), although it could shift slightly in next month's report.

UK inflation rose to 3.8 per cent in July, up from 3.6 per cent in June, keeping the rate stuck at its highest level since January. The rise in Consumer Prices Index (CPI) was also higher than economists had anticipated, who had forecasted 3.7 per cent.

UK inflation rose unexpectedly in July, led by energy and airfares, but core pressures remain nuanced. Markets signal BoE may pause in September.

Higher food and airfare prices pushed U.K. inflation above expectations in July, official figures showed Wednesday, which has tempered market expectations that the Bank of England will cut interest rates again this year.