The September U.K. inflation rate that feeds into many April benefit adjustments climbed to 3.5%, adding a spending consideration for Chancellor John Healey ahead of his Oct. 28 budget.
The Office for National Statistics (ONS) said annual consumer price inflation was 3.1% in August. September’s reading was the highest since October 2025, with transport, particularly motor fuels, contributing most to the rise in the annual rate.
Motor fuel prices were 29.8% above their level a year earlier, compared with a 23% annual increase in August. The average diesel price reached 192.5 pence a liter, its highest since July 2022.
Price pressures also extended beyond fuel. Core inflation, which excludes energy, food, alcohol and tobacco, rose to 2.8% from 2.6%. Services inflation increased to 3.7% from 3.4%, according to the ONS.
Food and nonalcoholic beverage prices were 1.3% higher than a year earlier, though they fell 0.2% from August. That monthly decline did not erase the increase over the preceding year.
The September index is typically used to set the following April’s increases for many working-age benefits. In an opinion article for The Independent, James Moore argued that demands for help with household and business costs leave Healey little room to maneuver. Moore also predicted a Bank of England rate increase at its next meeting.
The bank held its main rate at 3.75% in September, when three of its nine policymakers favored an increase to 4%. Its meeting record identified a prolonged energy shock as an inflation risk. Quoted two-year fixed mortgage rates were already about 0.95 percentage point higher than before the Middle East conflict, the bank said.
Healey’s budget is scheduled for Oct. 28. The bank’s next rate decision is due Nov. 5, followed by the ONS inflation release on Nov. 18.
