UK inflation rises to 3.5% in September as diesel hits highest price since 2022
Consumer prices rose faster than expected, driven by fuel costs linked to the Iran war. The Bank of England expects inflation to reach about 4% early next year.
At a glance
- UK consumer price inflation rose to 3.5% in the 12 months to September 2026, up from 3.1% in August and above the 3.4% expected — the highest since October 2025.
- Core inflation, excluding energy and food, rose to 2.8% from 2.6%; the CPIH measure rose to 3.6%.
- Motor fuel prices were up 29.8% on a year earlier; diesel was the most expensive since July 2022.
- The Bank of England expects inflation to average 3.75% in the last quarter of 2026 and about 4% early in 2027.
Prices in the UK are rising faster again. Consumer price inflation climbed to 3.5% in the year to September 2026, up from 3.1% in August, the Office for National Statistics (ONS) said on Wednesday, October 21. It was higher than the 3.4% economists expected and the highest rate since October 2025.
The key figures
| Measure | September 2026 | August 2026 |
|---|---|---|
| CPI inflation | 3.5% | 3.1% |
| CPIH (includes housing costs) | 3.6% | 3.3% |
| Core CPI (excl. energy, food) | 2.8% | 2.6% |
| Transport inflation | 6.6% | 4.6% |
| Motor fuels, year on year | +29.8% | — |
Fuel is the main driver
"Increased fuel prices were again the main driver, with the cost of diesel the highest since July 2022," said ONS chief economist Grant Fitzner.
At the pumps, petrol averages about 174p a litre — up 41p since the Iran war began on February 28 — and diesel about 199p, up around 57p. Airfares, computer games and live events also pushed prices up, while restaurants and hotels had the biggest downward effect.
Household bills
Energy bills are rising too. The Ofgem price cap went up 4% on October 1 to an average of £1,723 a year, and one energy consultancy expects a further rise of about 16% early in 2027, which would take the average bill close to £2,000.
What forecasters expect
| Forecaster | Outlook |
|---|---|
| Bank of England | 3.75% average in Q4 2026; about 4% in Q1 2027 |
| Deutsche Bank | About 4% by early 2027 |
| Treasury survey of economists | 3.4% in Q4 2026, easing to 2.3% by end-2027 |
Why it matters
- For households: wages may struggle to keep up with prices again, after a period when living costs had been easing.
- For interest rates: inflation well above the Bank of England's 2% target makes rate cuts unlikely and raises the possibility of a rise; the pound wavered after the data.
- For British Pakistanis and other diaspora families: higher living costs in the UK can squeeze the money sent home as remittances.
The figures reflect a pattern across many countries: the war involving Iran and disruption in the Strait of Hormuz have pushed oil above $100 a barrel, feeding into transport and food costs from Europe to South Asia.
What happens next
The Bank of England's next interest-rate decision is in November, when it will also publish new forecasts. October's inflation figures, due next month, will include the higher energy price cap.
Questions people are asking
What is the UK inflation rate now?
3.5% in September 2026, according to the Office for National Statistics, up from 3.1% in August.
Why is UK inflation rising?
Mainly because of fuel. Motor fuel prices were 29.8% higher than a year earlier after the Iran war pushed up global oil prices, and transport inflation jumped to 6.6%.
Will UK interest rates rise?
Higher-than-expected inflation increases pressure on the Bank of England, which forecasts inflation of around 4% early in 2027. Its next decision is due in November.
