Why Britain's inflation is rising again
Fuel prices are squeezing household budgets again. September's official figures show annual UK inflation accelerating, with motor fuels leading the increase.
▶ Watch the 99-second 3D explainerKey takeaways
- Annual CPI inflation increased from 3.1% in August to 3.5% in September 2026.
- Motor fuel prices were 29.8% higher than a year earlier; transport, particularly fuel, led the increase in annual inflation.
- Core CPI also rose. The Bank of England's 5 November decision remains pending.
The figures, with dates and units
| Measure | Earlier value | Latest value | Source and period |
|---|---|---|---|
| CPI annual inflation | 3.1% | 3.5% | ONS; August → September 2026 |
| Core CPI annual inflation | 2.6% | 2.8% | ONS; August → September 2026 |
| Motor fuel annual inflation | 23.0% | 29.8% | ONS; August → September 2026 |
| Average petrol price | — | 169.5 pence/litre | ONS; September 2026 |
| Average diesel price | — | 192.5 pence/litre | ONS; September 2026 |
| CPI monthly change | — | +0.4% | ONS; August → September 2026 |
| Bank Rate | — | 3.75%, held | Bank of England; September 2026 decision |
| Next rate decision | — | 5 November 2026 | Bank of England; schedule checked 21 October |
The ONS bulletin was published on 21 October 2026. Rates labelled annual compare with the same month a year earlier. UK statistics include Northern Ireland; the title uses Britain as familiar shorthand.
What changed?
The inflation rate increased by 0.4 percentage points. This does not mean the average basket suddenly became 3.5% more expensive in a month: that figure is the twelve-month comparison. The monthly CPI increase was 0.4%. CPI measures an expenditure-weighted average, so a household's experience depends on what it buys.
The fuel channel
ONS identifies transport, particularly motor fuels, as the largest upward contributor to the change in annual CPI inflation. Restaurants and hotels partly offset that pressure. At the pump, average petrol and diesel prices reached 169.5p and 192.5p per litre respectively in September. The narration rounds these to about £1.70 and £1.93; the displayed data retain the official precision.
In its 17 September 2026 policy summary, the Bank of England linked higher crude and refined energy prices to the prolonged Middle East conflict. That assessment predates today's inflation release. Our oil-to-refinery-to-pump animation illustrates the mechanism; it does not measure trade flows or attribute the entire inflation increase to a single cause.
What core inflation tells us
Core CPI removes energy, food, alcohol and tobacco. Its annual rate also increased, from 2.6% to 2.8%. This shows that the rise was not confined to the headline measure. It does not, by itself, establish an energy-driven wage-price spiral. The Bank's September discussion treated the timing and extent of wider energy-cost pass-through as uncertain.
What happens to interest rates?
The Bank held its policy rate at 3.75% in September. Its next scheduled decision is 5 November 2026. Higher inflation creates a policy challenge, but a rate increase is not a decided outcome. Bank Rate is also different from a particular mortgage or savings rate offered to a customer.
Frequently asked questions
Why is UK inflation rising again?
ONS identifies transport, especially motor fuels, as the largest upward contributor to the rise in annual CPI inflation between August and September 2026.
Did prices rise 3.5% in September alone?
No. Annual CPI was 3.5%; the monthly increase was 0.4%.
What does core inflation exclude?
Energy, food, alcohol and tobacco. The annual core CPI rate increased from 2.6% in August to 2.8% in September 2026.
Will the Bank raise rates in November?
As of 21 October, the decision remains pending. A rise on 5 November is possible, not guaranteed.
Sources
- Office for National Statistics, Consumer price inflation, UK: September 2026, released 21 October 2026. Table 1, main points, transport commentary and core CPI commentary.
- Bank of England, September 2026 Monetary Policy Summary and Minutes, published 17 September 2026. Policy rate, energy context and next scheduled decision.
Checked 21 October 2026. Revisit the sources before using this as a current policy outlook.
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