UK inflation rises to 3.5% as motor fuel prices jump 29.8%

The 3.5% rate was slightly higher than economists had predicted, the BBC reported. It is the highest reading in nearly a year and leaves inflation above the Bank of England's 2% target.

Fuel drives the headline rate

Motor fuel prices rose 29.8% compared with September last year and were the main driver, the Office for National Statistics said. Food price inflation remained at 1.3%.

The 3.5% rate is well below the 11.1% reached in October 2022, when gas and oil prices soared after Russia's full-scale invasion of Ukraine. That was the highest rate for 40 years. Inflation has fallen since then, but prices have not: they have risen less quickly.

Core inflation stays above target

Core CPI, which excludes food and energy, was 2.8% in the 12 months to September 2026, up from 2.6% in the 12 months to August. The Bank watches the measure because food and energy prices can be volatile, and it remained above the 2% target.

Rate cuts meet rising prices

The Bank of England cut its base rate six times between August 2024 and June 2026, taking it to 3.75%, the lowest level since early 2023. The 3.5% inflation reading now sits above the Bank's 2% target as the Monetary Policy Committee prepares to weigh the data at its next rate decision.

The BBC reported that inflation is widely expected to rise again in the coming months. The latest Ofgem price cap lifted household energy bills by 4% from 1 October, which the BBC said is expected to push inflation higher. Petrol prices are also likely to climb back after oil prices rose again when the US and Iran resumed attacks in the Strait of Hormuz in July, the BBC reported.

In April, the Bank warned that disruption to global energy markets could push UK inflation as high as 6% in the worst-case scenario. Its Monetary Policy Committee said it would act "forcefully" if oil prices did not start to fall, with up to six rate hikes in a worst-case scenario.

Wages and household bills

Regular pay grew ahead of inflation in the three months to August. Average annual growth in pay, excluding bonuses, was 3.7%, meaning regular pay grew by 0.8% after inflation between June and August, according to the latest official figures.

Prime Minister Andy Burnham scrapped VAT on household electricity bills in October. The BBC reported the move is predicted to have a small downward impact on inflation. Before the war in the Middle East broke out, UK inflation had been expected to be at or around the 2% target over the next five years, according to official forecasts published in March 2026.

Those forecasts now sit against a 3.5% reading. Fuel and household energy costs are pressures the Bank will weigh when it next sets its base rate.