UK inflation has climbed to its highest level in almost a year, with sharply higher petrol and diesel prices adding to the pressure on household budgets, official figures show.
The Consumer Prices Index (CPI) measure rose to 3.5 per cent in September, up from 3.1 per cent in August, according to the Office for National Statistics (ONS).
September’s figure is particularly significant because it is commonly used to determine increases to a range of benefits. The data has also been published just one week before the Budget.
Economists had generally forecast a smaller increase, with the consensus compiled by Pantheon Macroeconomics pointing to a rate of 3.4 per cent.
The ONS figure was therefore 0.1 percentage point above expectations. Inflation is now at its highest since October 2025, when it stood at 3.6 per cent.
Transport costs made the largest contribution to the monthly increase, as average petrol and diesel prices reached their highest levels in four years.
Grant Fitzner, the ONS chief economist, said inflation had risen notably in September, reaching its highest annual rate for almost 12 months. He identified rising fuel costs as the primary factor, adding that diesel prices were at their highest since July 2022.
Airfares also pushed inflation higher, alongside smaller increases in the prices of computer games and live events—categories that can fluctuate considerably. These effects were partly balanced by hotel prices, which increased less than they had a year earlier.
The annual cost of raw materials and goods sold by manufacturers also continued to rise, with crude oil and petrol prices contributing to the increases.
Inflation has been gaining momentum through the summer, driven in part by an energy shock linked to the Middle East that has lifted fuel and household energy costs.
Motor fuel was a major source of September’s increase, leaving inflation well above the Bank of England’s 2 per cent target.
Diesel has been at the centre of the surge. RAC figures show average prices exceeded £2 a litre for the first time at the start of this month.
ONS data showed motor fuel prices were 30 per cent higher in September than a year earlier, accelerating from an annual increase of 23 per cent in August.
Average petrol prices rose by 8.2p per litre between August and September, reaching 169.5p. That was the highest level recorded in roughly four years.
Chancellor John Healey said the Government recognised that price increases caused by conflicts in the Middle East and Europe were affecting households in Britain and around the world.
He said the decision to begin drilling at the Jackdaw gas field in the North Sea represented investment in the country’s clean energy future while supporting British workers.
Ahead of next week’s Budget, Mr Healey said he would build on that approach by maintaining fiscal discipline and pursuing growth across the country, while seeking to give families and businesses greater breathing space.
PM Andy Burnham and Chancellor John Healey at the Labour Party conference last month
Martin Beck, chief economist at WPI Strategy, said inflation had risen more sharply than anticipated in September and warned that price pressures were spreading more broadly.
CPI inflation has now increased for a third consecutive month, moving from 3.1 per cent in August to 3.5 per cent. Although higher petrol prices explained much of the latest rise, Mr Beck said the underlying figures offered less reassurance.
‘This can no longer be dismissed quite so easily as simply an energy shock. Core inflation rose to 2.8 per cent from 2.6 per cent, while services inflation increased to 3.7 per cent from 3.4 per cent. The Bank’s preferred measures of underlying services inflation also rose to 3.9 per cent.
‘With inflation exceeding expectations across several measures, the risk of higher energy costs feeding into more persistent domestic inflation pressures is becoming harder to ignore.’
The International Monetary Fund recently warned that cost-of-living crises fall harder on poorer households who dedicate a larger proportion of their income to everyday essentials such as food and energy.
The September inflation rate is typically used to decide the level of increase for many benefits, such as universal credit, tax credits and disability benefits.
This rate is also a key part of the pension triple lock, which is used to decide how much pensions will increase by in the following April.
But the increase is based on either this inflation rate, average earnings growth between May and July, or 2.5 per cent.
State pensions are, therefore, expected to increase by 3.9 per cent next year based on wage growth figures which have already been published by the ONS.