Britain’s annual consumer inflation is forecast to rise to 3.4% in September, a reading that feeds into benefit uprating as higher fuel costs put pressure on household budgets.
The Independent reported that a forecaster consensus supplied by Pantheon Macroeconomics puts the Consumer Prices Index (CPI) rate at 3.4%. That compares with the Office for National Statistics’ (ONS) 3.1% August reading, which was already above the Bank of England’s 2% target. The September figure has not yet been released.
September CPI feeds into increases for benefits including Universal Credit and disability benefits, but the rules differ by payment. For the 2027-28 Universal Credit standard allowance, legislation provides for an additional 3.1% uplift alongside the CPI-based increase.
The rate also counts toward the state pension’s triple lock. Under that rule, the basic State Pension and the new State Pension’s full rate increase by whichever is highest: September CPI inflation, average earnings growth from May through July, or 2.5%. The ONS reported 3.9% growth in total earnings, including bonuses, for that period — above Pantheon’s inflation forecast.
In August, transport, particularly motor fuels, made the largest upward contribution to the change in the annual CPI rate, the ONS said. Pantheon economists Rob Wood and Elliott Jordan-Doak expect motor fuel prices to push up the September rate as well. The ONS has linked fuel pressure to the Middle East energy shock.
Deutsche Bank chief UK economist Sanjay Raja said competition among supermarkets had restrained food price increases. He said energy costs and extreme weather could push them higher. The International Monetary Fund has said rising costs for essentials such as food and energy weigh more heavily on poorer households, which spend a greater share of their income on them.
A further household cost increase followed the month being measured: a higher price cap set by the Office of Gas and Electricity Markets (Ofgem) took effect Oct. 1 in England, Scotland and Wales. It is not part of September’s inflation reading.
The Bank of England’s next interest-rate decision is scheduled for Nov. 5. The ONS is due to publish September CPI at 2 a.m. ET (06:00 UTC) Wednesday, Oct. 21.
