UK Gilt Yield at One-Month High as Oil Surge Offsets Softer Inflation

2026-07-22 07:10 By Joana Ferreira 1 min. read

The UK 10-year gilt yield rose to 5.05%, its highest level since May 19, as investors weighed rising oil prices against softer UK inflation.

Brent crude climbed to a more than one-month high after President Donald Trump warned of further strikes on Iran and pledged retaliation if Iran-backed Houthi rebels disrupt Red Sea shipping.

Meanwhile, UK annual inflation slowed to 2.6% in June, the lowest since March 2025 and below forecasts of 2.7%, driven by lower transport and food prices.

However, core inflation (2.6%) and services inflation (3.6%) both came in slightly above expectations, underscoring persistent underlying price pressures.

Businesses remain cautious, with CBI economist Martin Sartorius warning that inflation could accelerate again in the coming months.

Chancellor John Healey welcomed the softer inflation reading but said further support is needed, as the government announced lower VAT on electricity bills and a £2 cap on single bus fares across England from January.



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