UK inflation has climbed to 3.5 per cent in September, its highest level in almost a year, as soaring fuel prices threaten to put further pressure on retailers.
The latest figures from the Office for National Statistics showed inflation rising from 3.1 per cent in August, exceeding economists’ expectations of 3.4 per cent and remaining well above the Bank of England’s two per cent target.
The increase was largely driven by higher petrol and diesel prices, which have surged amid the ongoing conflict in the Middle East.
Average petrol prices rose by 8.2p per litre between August and September, compared with a 0.2p decline during the same period last year.
Diesel prices increased by 10.7p per litre over the month, compared with a 0.4p fall in September 2025, with prices topping £2 per litre in October.
The rise threatens to increase transport and distribution costs for retailers, while putting further pressure on shoppers’ disposable incomes ahead of the Christmas trading period.
However, food price inflation remained steady at 1.3 per cent as competition between supermarkets helped offset rising costs, while clothing prices edged down slightly.
Underlying inflation also accelerated, with core inflation, which excludes food, energy, alcohol and tobacco, rising to 2.8 per cent from 2.6 per cent in August.
Meanwhile, services inflation climbed from 3.4 per cent to 3.7 per cent, adding to concerns that price pressures are becoming more widespread across the economy.
The latest figures have increased expectations that the Bank of England could raise interest rates at its next meeting on 5 November, potentially adding further pressure to household finances.
Economists have warned that inflation could climb above four per cent in early 2027 as higher energy and transport costs feed through to consumer prices.
National Institute of Economic and Social Research economist Charlotte O’Leary warned that rising fuel and transport costs were likely to push food prices higher, while an increase in household energy bills in January could intensify the squeeze.
The figures come a week before Chancellor John Healey’s Budget on 28 October, with mounting pressure on the government to introduce measures to ease the cost-of-living crisis.
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