UK inflation rose to 3.5% in the year to September, up from 3.1% the previous month, according to the Office for National Statistics. The acceleration was driven primarily by sharp increases in petrol and diesel prices, which surged as conflicts in the Middle East and Europe squeezed global oil supplies. The ONS said petrol prices in September reached their highest level since August 2022, while diesel also rocketed. Between August and September, the average petrol price rose by 8.2p per litre to 169.5p per litre, and diesel climbed to 192.5p per litre. Motor fuel prices overall jumped by 29.8% over the period.
Grant Fitzner, chief economist at the ONS, described September's increase as "notable", marking inflation at its highest rate in almost a year. Beyond fuel, the rise was also driven by increased prices for airfares, computer games and live events, Fitzner said. Global supply disruptions have intensified following the effective closure of the Strait of Hormuz by Iran after US and Israeli attacks, which severely disrupted a major global supply line for crude oil. Russian and Ukrainian attacks on each other's infrastructure have also hampered oil refining capacity worldwide.
Chancellor John Healey acknowledged the impact, saying: "We know that price rises from conflicts in the Middle East and Europe are hitting Britain and countries worldwide." He noted that the International Monetary Fund had last week praised the UK government for its "fiscal discipline". Healey said the government had approved plans to extract more gas from the North Sea's Jackdaw field and that the Budget scheduled for 28 October would "keep up this momentum" by adhering to the government's self-imposed fiscal rules while driving "growth in every postcode, while giving businesses and families some breathing space".
The inflation figures coincided with data showing the government borrowed £25bn in September, £1.8bn higher than a year earlier, as higher inflation helped to push up debt interest costs. For UK savers and borrowers, higher inflation reduces the real value of savings while increasing the cost of servicing debts, particularly mortgages and other variable-rate loans.