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4h ago

UK Inflation Rises to 3.5% in September

Higher petrol and diesel prices tied to the Iran–Middle East energy shock raise odds of a Bank of England rate hike in November.

A customer shops for vegetables at gourmet grocery store Andreas, in London, Britain, March 28, 2024. REUTERS/Isabel Infantes
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Cyclists ride over London Bridge during the morning rush-hour in London, Britain, December 16, 2025. REUTERS/Toby Melville
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Overview

  • The Office for National Statistics confirmed on Wednesday that annual CPI inflation rose to 3.5% in September from 3.1% in August, slightly above most forecasts.
  • The rise was driven mainly by motor fuels and wholesale energy costs with average petrol at about 169.5p per litre and diesel near 192.5p per litre in September.
  • Core inflation climbed to 2.8% and services inflation to roughly 3.7%, signaling that price pressure is broadening beyond energy into domestic services.
  • Markets have pushed up expectations that the Bank of England will raise Bank Rate to around 4% at its November meeting, which would raise borrowing costs for households and businesses.
  • The September CPI will be used to set many benefit and pension upratings and, together with Ofgem’s October cap rise and the government’s Jackdaw gas decision, will tighten fiscal choices for the chancellor ahead of next week’s Budget.