UK Inflation Hits Highest Level Since October 2025

UK inflation rose to 3.5% year-over-year in September 2026, beating forecasts of 3.4% and up from 3.1% in August. That is the highest reading since October 2025. Fuel prices were the biggest driver, but core inflation (which strips out energy, food, alcohol and tobacco) climbed from 2.6% to 2.8%. That gives the Bank of England a tougher call on interest rates.

UK Inflation: Key Takeaways

• 3.5% year-over-year: UK CPI (the consumer price index, which tracks what households pay) beat the 3.4% forecast and topped August’s 3.1%.
• 0.4% month-over-month: Prices rose 0.4% from August, above the 0.3% forecast. August’s monthly gain was 0.5%.
• 2.8% core inflation: Core CPI beat the 2.7% forecast and rose from 2.6% in August.
• 3.7% services inflation: Services CPI climbed from 3.4% in August and topped the 3.6% forecast.
• 29.8% motor fuels: Fuel prices rose 29.8% year-over-year, up from 23.0% in August. Petrol averaged 169.5 pence per litre and diesel averaged 192.5 pence per litre.
• Thursday, November 5: The Bank of England announces its next rate decision at 12:00 p.m. UK time (7:00 a.m. ET). Markets expect a quarter-point hike from 3.75% to 4%.

What Were the UK Inflation Results for September 2026?

The Office for National Statistics (ONS), the UK’s official data agency, put CPI at 3.5% year-over-year. CPI, short for consumer price index, tracks the cost of a shopping basket that holds everything from petrol to haircuts. A 3.5% reading means that basket costs 3.5% more than it did in September 2025. In a Reuters poll, economists expected 3.4%, and the Bank of England’s July forecasts had pointed to 3.0%.

Month to month, prices rose 0.4%, above the 0.3% forecast. Core inflation skips the price items that jump around, such as energy and food. Economists use it to see where prices are heading once the one-off swings fade. Core came in at 2.8%, above the 2.7% forecast. Services inflation, which covers things like travel, hotel stays and haircuts, rose to 3.7% from 3.4%, above the 3.6% forecast.

What Pushed UK Inflation Higher?

Fuel was the main driver. The ONS says transport added more to the annual rate than any other group, with motor fuels in front. Motor fuel prices rose 29.8% year-over-year, up from 23.0% in August. Petrol averaged 169.5 pence per litre, 8.2 pence more than in August, while diesel averaged 192.5 pence per litre, up 10.7 pence. Transport as a whole climbed to a 6.6% annual rate from 4.6%.

One group pulled the other way. Restaurants and hotels slowed to a 3.8% annual rate from 4.1%, which softened the jump.

Fuel prices follow oil, so a fuel-led jump can fade when energy prices ease. Core and services inflation climbed in the same month, and those measures tend to change at a slower pace.

What Does This Mean for the Bank of England?

The Bank of England (BoE) aims to keep inflation at 2%. September’s 3.5% sits 1.5 percentage points above that target. The BoE’s key interest rate, called Bank Rate, stands at 3.75%. Investors and many analysts expect the Monetary Policy Committee (MPC), the panel that sets the rate, to raise it to 4%. That would be the first hike in more than three years.

The MPC announces its decision on Thursday, November 5, at 12:00 p.m. UK time (7:00 a.m. ET). Reuters reports that Governor Andrew Bailey and other policymakers say a hike becomes more likely the longer energy prices stay high. Reuters adds that MPC member Megan Greene, a long-time advocate of a hike, warns of broader inflation risks from the energy shock. She says those risks are greater than expected.

Money markets agree. Citing LSEG data, Reuters put the odds of a quarter-point hike in November above 90%. The committee has not voted yet, and energy prices can change before then.

Factory gate prices, which measure what producers charge for their goods, rose 4.6% year-over-year in September, the biggest jump since April 2023, Reuters reports. Manufacturers’ input costs rose 8.3%, above the 7.2% forecast. Higher costs like these can reach store shelves later.