UK inflation jumps to 3.1% in August as fuel prices rise, up from 2.9%, after higher energy costs linked to the Middle East war

On Wednesday, 16 September 2026, the Office for National Statistics said Britain’s annual inflation rate rose to 3.1 per cent in the 12 months to August, up from 2.9 per cent in July and in line with analysts’ forecasts.

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The ONS figures showed higher fuel costs, linked to the war in the Middle East, helping to push the Consumer Prices Index higher.

The rise adds pressure on Prime Minister Andy Burnham and finance minister John Healey to ease the cost of living before the Labour government’s budget update next month. The budget is due on 28 October.

The Bank of England is forecast to keep its benchmark interest rate at 3.75 per cent on Thursday as the UK economy struggles for growth.

To tackle high consumer prices, the US Federal Reserve is expected on Wednesday to raise borrowing costs, after a similar move by the European Central Bank last week.

With central bank rates rising and government bond yields at multi-decade highs in recent weeks, John Healey has pledged tight fiscal discipline. He has not said whether the 28 October budget will include new tax rises.

Analysts expect inflation to climb further towards the end of the year as higher energy costs feed into bills, with little sign of a deal to end the Middle East war.

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Richard Carter, head of fixed interest research at Quilter Cheviot, said: “With the situation in the Middle East looking increasingly fraught, the expectation is that inflation will continue to climb higher until the end of the year at a minimum.” He added: “For the government, today’s figures are a kick in the teeth for an administration that wants to make easing the cost of living its central mission.”