UK inflation rises to 3.5% – November rate hike moves closer
Expensive fuel pushes inflation to its highest since October 2025. The Bank of England is expected to raise rates on 5 November for the first time since 2023, while public debt tops £3 trillion.
Archive image · Photo: Diliff / Wikimedia Commons, CC BY-SA 3.0 (cropped and resized)
UK consumer prices rose 3.5% in September, up from 3.1% in August, the Office for National Statistics said on Wednesday. Economists polled by Reuters had expected 3.4%. Core inflation, excluding energy, food, alcohol and tobacco, climbed to 2.8% from 2.6%, and services inflation rose to 3.7% from 3.4%.
Fuel was again the main driver: motor fuel cost around 30% more than a year earlier, and diesel was at its highest since July 2022, according to the ONS. "Inflation climbed notably in September to its highest annual rate in almost a year," said ONS chief economist Grant Fitzner, citing fuel and airfares. The backdrop is the war with Iran, which has pushed up oil and gas prices.
Financial markets now see a Bank of England rate hike on 5 November as almost certain – according to Reuters most likely from 3.75% to 4%, which would be the first increase since 2023. At the same time, public sector debt exceeded £3 trillion for the first time. Chancellor John Healey presents his budget on 28 October and says he wants to give families and businesses "some breathing space".