
Consumer Prices Index exceeds Bank of England target as motor fuel costs surge and global conflicts impact markets.
UK inflation rose to 3.5% in the year to September, exceeding the Bank of England's 2% target, largely driven by higher petrol and diesel prices as global energy markets face ongoing disruptions.
AI-generated summary
UK inflation rose to 3.5% in September, driven by motor fuel prices and ongoing geopolitical energy disruptions.
Inflation in the UK rose to 3.5% in the year to September, the highest rate in nearly a year and above the Bank of England's 2% target.
The rise was slightly higher than economists had predicted, driven by higher petrol and diesel prices.
Inflation is widely expected to rise again in the coming months.
The ONS uses price changes in the basket of goods over the previous 12 months to calculate inflation.
The main inflation measure is called the Consumer Prices Index (CPI), external, and the latest figure is published every month.
The Bank of England looks closely at the inflation figures when deciding whether to increase, lower or hold its base interest rate, which is currently 3.75%.
Putting rates up makes borrowing more expensive, giving people and businesses less money to spend, reducing demand for goods and slowing price rises.
But it is a careful balancing act – increasing borrowing costs also risks harming the economy.
For example, homeowners face higher mortgage repayments, which can outweigh better savings deals.
Businesses also borrow less, making them less likely to create jobs. Some may cut staff and reduce investment.
The higher figure for September was mostly caused by higher prices for motor fuel, which rose by 29.8% compared to September last year.
Food price inflation remained at 1.3%.
But it can take a year for changes in the cost of food to filter through to the shop floor because of the way supply chains work, so prices could still rise as a result of the widespread disruption caused by the war in Iran.
Inflation soared in 2022 because oil and gas were in greater demand after the Covid pandemic, and energy prices surged again when Russia invaded Ukraine.
Before the war in the Middle East broke out, UK inflation had been expected to be at or around the target level of 2% over the next five years, according to the official forecasts published in March 2026.
But in April, the Bank of England warned that disruption to global energy markets could push UK inflation as high as 6% in the worst-case scenario.
When the latest ceasefire took effect, analysts said it could limit further inflation hikes. Oil prices initially fell sharply after the deal was announced, but have risen again since the US and Iran resumed attacks in the Strait of Hormuz in July.
As a result, UK petrol prices are likely to climb back up. This - coupled with the 4% increase in household energy bills from 1 October when the latest Ofgem price cap took effect - is expected to push UK inflation higher.
As part of his pledge to provide "breathing space" for households struggling with the cost of living, Prime Minister Andy Burnham scrapped VAT on household electricity bills in October. It is predicted to have a small downward impact on inflation.
Precisely because food and energy prices can be very volatile, the Bank of England also considers other economic measures such as "core inflation", which excludes these costs.
Core CPI was 2.8% in the 12 months to September 2026, up from 2.6% in the 12 months to August.
The US and eurozone countries have also been trying to limit price increases, but also face challenges with inflation.
The inflation rate for countries using the euro was 3.8% in September, according to EU data, external - up from 3.2% in August.
The European Central Bank (ECB) has raised interest rates twice in recent months to 2.5%.
US inflation was in 3.7% in September, up from 3.4% in August, with prices there also affected by higher fuel costs.
The Federal Reserve cited "too high" inflation when it raised interest rates for the first time in three years in September, to a range of 3.75%-4%.
The move came despite fierce opposition from President Donald Trump, who had called for rates to be cut.
AI outlook — possibilities, not facts
UK petrol prices are likely to climb back up following renewed attacks in the Strait of Hormuz.
Likely · Within weeks

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