UK inflation rose to 3.5% in September from 3.1%, with motor fuel prices making the largest upward contribution, the ONS said. Core and services inflation also accelerated. ActionForex says the stronger readings support the case for a restrictive Bank of England stance.
UK inflation rose to 3.5% from 3.1% in the year to September, according to the Office for National Statistics (ONS). Consumer prices rose 0.4% on the month, above the 0.3% forecast, taking the annual rate to its highest since October 2025.
Fuel prices drive the increase
Motor fuel prices rose 29.8% in the 12 months to September, compared with 23.0% in the 12 months to August. The average petrol price rose 8.2p per litre to 169.5p between August and September, the highest since August 2022.
Diesel rose 10.7 pence per litre to an average of 192.5 pence, the highest since July 2022. ONS chief economist Grant Fitzner said the increase was also driven by rising prices for airfares, computer games and live events.
Core and services inflation also climb
Core CPI, which excludes energy, food, alcohol and tobacco, rose 2.8% in the 12 months to September, up from 2.6% in August. Annual services inflation rose to 3.7% from 3.4%.
Goods inflation, meanwhile, rose to 3.2% from 2.7%. Restaurants and hotels made the largest offsetting downward contribution, the ONS said.
What the data means for the Bank of England
ActionForex said the stronger readings support the case for the Bank of England to maintain a restrictive policy stance. The outlet added that a November rate hike was already heavily anticipated in earlier market pricing.
The figures arrived a week before Chancellor John Healey delivers his first Budget, scheduled for 28 October.
Sources: BBC News, Investing.com, ActionForex
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