UK Inflation Rises to 3.5% in September 2026 as Fuel Jumps and Services Inflation Climbs
UK consumer prices rose 3.5% in the year to September, above the 3.4% forecast, as motor fuel prices jumped 29.8%. Services inflation rose to 3.7% before the Bank of England's November 5 decision, and sterling barely moved.
- UK inflation rose to 3.5% in the 12 months to September 2026, from 3.1% in August and above the 3.4% Reuters poll forecast.
- Motor fuel prices were 29.8% higher than a year earlier, the highest rate since August 2022.
- Services inflation rose to 3.7% from 3.4% and core inflation to 2.8% from 2.6%, the measures the Bank of England watches for second-round effects.
Reaction by asset (real prices)
| Asset | 2m before | At release | +1m | +10m | +1m % | +10m % |
|---|---|---|---|---|---|---|
| GBPUSD | 1.34 | 1.34 | 1.34 | 1.34 | +0.01% | -0.05% |
UK inflation rose to 3.5% in the 12 months to September 2026, from 3.1% in August and above the 3.4% economists polled by Reuters expected, the Office for National Statistics said on Wednesday, October 21. Higher petrol and diesel prices drove most of the increase, but services and core inflation also rose, which strengthens the case for a Bank of England rate rise on November 5. The figures reached the MoveSurge news feed at 07:00:10 London time (06:00:10 UTC), and the pound was almost unchanged against the dollar in the minutes that followed.
| Measure, % a year earlier | September | Forecast | August |
|---|---|---|---|
| Consumer prices (CPI) | 3.5% | 3.4% | 3.1% |
| Core CPI, excluding food, energy, alcohol and tobacco | 2.8% | 2.6% | |
| Services CPI | 3.7% | 3.6% | 3.4% |
| Motor fuel prices | 29.8% | 23.0% | |
| Factory gate prices (output PPI) | 4.6% | 3.8% | |
| Manufacturers' input costs (input PPI) | 8.3% | 6.7% |
Fuel drove the rise
Motor fuel prices were 29.8% higher than a year earlier, up from 23.0% in August and the highest annual rate since August 2022. The jump follows the rise in oil prices since the start of the Iran war, and it is still feeding through the supply chain: manufacturers paid 8.3% more for their materials and fuel than a year earlier, and the prices they charged rose 4.6%. Household energy bills will add more pressure over the winter, because the Ofgem price cap on gas and electricity bills rose at the start of October.
Why services inflation matters to the Bank of England
Services inflation, which mostly reflects wages and rents rather than imported fuel, rose to 3.7% from 3.4%, above the 3.6% forecast. Core inflation, which strips out food, energy, alcohol and tobacco, rose to 2.8% from 2.6%. Those two measures are how the Bank judges whether an energy shock is spreading into prices across the economy, and both rose in the same month. In July, the Bank had forecast that inflation would be 3.0% in September, half a percentage point below the actual figure.
Bank Rate stands at 3.75%. The Monetary Policy Committee announces its next decision on November 5, and investors and many economists expect a rise to 4%.
How the pound moved
GBP/USD traded at 1.3372 just before the release and at 1.3373 one minute later, a rise of 0.01%. It was at 1.3366 after ten minutes, down 0.045%, and the chart's last candle, thirteen minutes after the release, closed at 1.3367, down 0.04%. A beat of a tenth of a point barely moved sterling because a November rate rise was already widely expected before the release. The pound edged higher later in the morning and was at 1.3392 at 10:43 London time, 0.15% above its level before the release.
What is the UK inflation rate for September 2026?
The Office for National Statistics said on October 21, 2026 that consumer prices rose 3.5% in the 12 months to September, up from 3.1% in August and above the 3.4% Reuters poll forecast.
Why did UK inflation rise in September 2026?
Higher petrol and diesel prices were the main cause: motor fuel prices were 29.8% higher than a year earlier, the highest rate since August 2022. Services inflation also rose to 3.7% from 3.4%.
Will the Bank of England raise rates in November 2026?
The Bank announces its next decision on November 5 with Bank Rate at 3.75%. Investors and many economists expect a rise to 4% after the September inflation data.
Sources
-
Consumer price inflation, UK: September 2026
— Office for National Statistics
CPI rose 3.5% in the 12 months to September 2026, from 3.1% in August, driven by petrol and diesel prices.
-
UK inflation picks up more than expected to 3.5% in September
— Reuters via Global Banking & Finance Review
CPI 3.5% against a 3.4% Reuters poll; Bank of England July forecast of 3.0%; core 2.8% from 2.6%; services 3.7% from 3.4% against a 3.6% forecast; producer input prices 8.3% and output prices 4.6%; November 5 decision and an expected rise to 4%.
-
UK Inflation Rises to 3.5%, Above Forecasts, as Fuel Prices Surge
— AskTraders
Motor fuel prices up 29.8% from a year earlier, from 23.0% in August and the highest since August 2022; Bank Rate at 3.75%; Ofgem price cap rise from the start of October.
-
UK inflation jumps to 3.5%, cementing rate hike expectations
— CNBC
September inflation of 3.5% strengthened expectations of a Bank of England rate rise in November.
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