U.K. annual consumer price inflation rose to 3.5% in September, with transport contributing most to the increase, giving the Bank of England new data before its Nov. 5 rate decision.
The Office for National Statistics (ONS) said the annual CPI rate climbed from 3.1% in August to its highest level since October 2025. Consumer prices rose 0.4% from August. Economists polled by Reuters had forecast an annual rate of 3.4%.
Transport, led by motor fuels, was the biggest driver of the rise in the annual CPI rate, the ONS said. Restaurants and hotels provided the largest partial offset. Core CPI, which excludes energy, food, alcohol and tobacco, was 2.8% year over year in September, compared with 2.6% in August.
FXStreet reported sterling trading around $1.3375 against the dollar in early Asian hours, before the inflation figures were released.
The figures followed U.K. labor data showing unemployment at 4.7% for June through August. The ONS also reported that job vacancies fell by 21,000 to 691,000 in July through September. Regular pay grew 3.7% from a year earlier in June through August.
The Bank of England held Bank Rate at 3.75% in September. Three of the nine members of its Monetary Policy Committee voted to raise it by 0.25 percentage point to 4%. The bank’s inflation target is 2%, and its September assessment described risks to the inflation outlook as tilted upward.
The bank’s next Bank Rate decision is scheduled for Nov. 5. The ONS plans to release the next CPI figures on Nov. 18.
