Why it matters
- U.K. CPI inflation rose to 3.5% in the 12 months to September from 3.1% in August, the highest since October 2025, the Office for National Statistics said Wednesday, Oct. 21. CPIH rose to 3.6% from 3.3%.
- Motor fuels drove the increase. Petrol averaged 169.5 pence a liter and diesel 192.5 pence, the highest since 2022, and motor fuel prices were up 29.8% from a year earlier, the ONS said.
- Core CPI rose to 2.8% from 2.6% and services inflation to 3.7% from 3.4%. Bank Rate is 3.75%, and the Bank of England's next decision is due Nov. 5.
Analysis: this piece includes our interpretation of the facts reported.
U.K. consumer price inflation rose to 3.5% in the 12 months to September 2026, up from 3.1% in August and the highest rate since October 2025, the Office for National Statistics said Wednesday, Oct. 21. Higher petrol and diesel prices drove most of the increase.
The figure was above the 3.4% that economists expected, according to Trading Economics. Prices rose 0.4% from August, the ONS said, compared with little change in September 2025.
What drove U.K. inflation higher in September?
Transport made the largest upward contribution, the ONS said. Transport inflation rose to 6.6% from 4.6%. Petrol rose 8.2 pence a liter from August to an average of 169.5 pence, the highest since August 2022. Diesel rose 10.7 pence to 192.5 pence, the highest since July 2022. Overall motor fuel prices were 29.8% higher than a year earlier, up from 23.0% in August.
Recreation and culture added to the rise, with that rate climbing to 2.3% from 1.6% on live music and computer game downloads. Housing and household services rose to 4.5% from 4.3%, helped by owner occupiers' housing costs and a 22.7% jump in kerosene prices, the ONS said. Restaurants and hotels made the largest offsetting contribution, easing to 3.8% from 4.1%. Food and non-alcoholic beverage inflation held at 1.3%.
Core and services inflation
| Measure, 12-month rate | August 2026 | September 2026 |
|---|---|---|
| CPI | 3.1% | 3.5% |
| CPIH | 3.3% | 3.6% |
| Core CPI | 2.6% | 2.8% |
| CPI services | 3.4% | 3.7% |
| CPI goods | 2.7% | 3.2% |
| Core CPIH | 2.9% | 3.1% |
Source: Office for National Statistics.
Core CPI excludes energy, food, alcohol and tobacco. Trading Economics said core and services inflation were also above expectations.
How has U.K. inflation moved this year?
| Month (2026) | CPI | CPIH |
|---|---|---|
| April | 2.8% | 3.0% |
| May | 2.8% | 3.0% |
| June | 2.6% | 2.8% |
| July | 2.9% | 3.1% |
| August | 3.1% | 3.3% |
| September | 3.5% | 3.6% |
Source: ONS, Table 1 of the September bulletin.
CPI has risen for three straight months since June's 2.6%. The ONS said its survey collected all flight prices after the conflict in the Middle East broke out Feb. 28, 2026.
When is the next Bank of England decision?
The Bank of England's next Bank Rate decision is due Thursday, Nov. 5, with a new Monetary Policy Report, the bank's website shows. It held Bank Rate at 3.75% on Sept. 17. In that decision, the bank said energy prices were volatile because of the Middle East conflict and that it expected inflation to rise further from August's 3.1%.
How did the pound and gilts react?
The pound was at $1.3400 at 12:53 GMT (8:53 a.m. ET), up 0.16% from Tuesday's $1.3379, Yahoo Finance data show. It was near $1.3375 just before the 7 a.m. London release. The 10-year gilt yield was 5.38% on Oct. 21, down 0.04 percentage points from the previous session and up 0.16 points over the past month, according to Trading Economics. Trading Economics said markets were pricing in a quarter-point rate increase in November.
U.K. borrowing costs have moved alongside Europe's: see our look at the French bond spread over Germany, the widest since 2012, and how the pound and euro feed into the dollar index drivers this week. Live levels are on our markets page.