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, Reuters reported.

Inflation in Britain's services sector - which is watched closely by the Bank of England - accelerated to 5.0% from 4.7% a month earlier.

The BoE expected headline inflation to rise to 3.8% in July but had forecast a smaller 4.9% rise in services prices. Economists polled by Reuters had mostly expected increases of 3.7% and 4.8% respectively, according to Reuters.