UK Inflation Climbs to 3.5% as Fuel Costs Surge

UK inflation increased to 3.5% in September 2026, up from 3.1% in August.

UK annual inflation accelerated to 3.5% in September 2026, up from 3.1% in August and above forecasts of 3.4%. The reading marked its highest level since October 2025, with rising fuel costs accounting for much of the increase.

Fuel Prices Drive the Increase

Transport inflation jumped to 6.6%, driven by a sharp rise in motor fuel prices. Petrol reached 169.5 pence per litre, while diesel climbed to 192.5 pence, pushing motor fuel inflation to 29.8%.

Price increases also accelerated across housing and household services, communications, and recreation and culture. Food inflation held steady at 1.3%, while inflation in restaurants and hotels eased to 3.8%.

Underlying Inflation Adds to BoE Concerns

Price pressures extended beyond energy, with key inflation measures showing further increases:

Core CPI: Rose to 2.8% from 2.6%.
Goods inflation: Increased to 3.2%.
Services inflation: Reached 3.7%.
Monthly CPI: Consumer prices rose 0.4% in September.

The figures suggest that inflation is spreading beyond fuel costs, complicating the Bank of England's interest rate outlook. Persistent pressure from energy and services prices could make it harder for policymakers to ease monetary policy in the coming months.

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