UK inflation climbs to 3.5% as petrol and diesel costs surge

Britain's annual rate of inflation climbed to 3.5% in the year to September, up from 3.1% the previous month, as higher pump prices substantially increased the cost of living.

According to data released by the Office for National Statistics, the rise represents the sharpest pace of consumer price increases recorded in nearly a year. The figures arrive just days before Chancellor John Healey presents his inaugural Budget to Parliament on 28 October.

A substantial jump in transport fuel costs was the primary factor behind the acceleration, with overall motor fuels rising by 29.8% during the monitored timeframe. Petrol jumped by 8.2p per litre month-on-month to reach 169.5p, representing its highest mark since August 2022, while diesel climbed to an average of 192.5p per litre.

The price surge at the pumps follows heavy disruption across worldwide energy markets. International crude availability has been restricted following the effective shutdown of the Strait of Hormuz by Iran in the wake of strikes by Israel and the United States. Concurrently, ongoing attacks between Russia and Ukraine targeting energy infrastructure have restricted global refining output.

ONS chief economist Grant Fitzner noted that September recorded a notable climb overall. Beyond forecourt expenses, Fitzner pointed to climbing costs across air travel, live entertainment, and video games as additional contributors to the month's uptick.

Responding to the statistics, Healey acknowledged the domestic impact of foreign turbulence, stating that price rises linked to hostilities across Europe and the Middle East continue to affect the country alongside other global economies. Pointing to the recent approval of expanded extraction at the North Sea's Jackdaw gas field, the Chancellor stressed that the upcoming fiscal statement would observe official borrowing boundaries while aiming to support households and commercial enterprises.

The elevated inflation data coincided with public finance figures showing state borrowing reached £25bn during September. That total marked an increase of £1.8bn compared to the same month in the prior year, driven upward in part by the heavier debt interest expenses associated with higher inflation.