Inflation Hits 3.1%, Experts Predict Interest Rate Hike

UK inflation has hit 3.1% in the 12 months to August 2026, according to the latest Consumer Price Index (CPI) figures published on September 16.

This increase is up from 2.9% in July and core inflation remained unchanged at 2.6%. The goods annual rate rose from 2.2% to 2.7%, while the services rate remained the same at 3.4%.

Experts believe that with inflation expected to continue climbing, the likelihood of an interest rate hike has increased. Quilter head of fixed interest research Richard Carter stated that conflict in the Middle East is impacting UK economic data significantly, causing increased petrol and energy prices, as well as rising housing costs.

Carter added that 'today's figures put a rate hike into the category of genuine consideration, with at least one expected this year.' He also noted that for the government, today's inflation figures are a 'kick in the teeth' and will limit their ability to ease living costs through budget measures.