UK Inflation Rises to 3.5%, Above Forecasts, as Fuel Prices Surge

UK inflation rose to 3.5% in September from 3.1% in August, the Office for National Statistics (ONS) reported at 7am today. The consumer prices index (CPI) was above the 3.4% expected by economists polled by Pantheon Macroeconomics.

It is the highest annual rate since October 2025, when it was 3.6%. Prices rose 0.4% on the month, after 0.5% in August.

Fuel drove it. Transport made the largest upward contribution, adding 0.94 percentage points to the annual rate, and its annual rate rose to 6.6% from 4.6% in August.

Motor fuel prices were 29.8% higher than a year earlier, up from 23.0% in August, and are at their highest since August 2022. Petrol averaged 169.5p a litre, up 8.2p on the month, while diesel reached 192.5p, up 10.7p.

Before the release, Pantheon’s Rob Wood and Elliott Jordan-Doak had expected higher motor fuel prices to be a major contributor. Deutsche Bank’s Sanjay Raja added that the rise in the Ofgem energy price cap from the start of October means higher household bills over the winter.

Energy was not the whole story. Core inflation, which strips out energy, food, alcohol and tobacco, rose to 2.8% from 2.6%, and services inflation climbed to 3.7% from 3.4%.

Measure	September	August	Consensus
Headline CPI	3.5%	3.1%	3.4%
Core CPI	2.8%	2.6%	n/a
Services	3.7%	3.4%	n/a
Goods	3.2%	2.7%	n/a

Goods inflation at 3.2% is the highest since September 2023, while restaurants and hotels eased to 3.8% from 4.1% and food inflation was unchanged at 1.3%.

The mix matters for the Bank of England, which sets interest rates to bring inflation back to target. Firmer services inflation is harder to look past than fuel alone, which makes a rate cut harder to argue for with Bank Rate at 3.75%.

The ONS publishes October’s figures on the 18th of November.