UK Inflation Hits 3.1% as Fuel Costs Drive Higher Transport Prices
UK inflation rose to 3.1% in the year to August, matching forecasts and adding to debate over Bank of England interest rates. The reading was the highest since December 2025.
Transport prices increased by 4.6% in the year to August, with fuel costs playing a significant role. Petrol prices rose 9.1 pence per litre between July and August, taking the average price to 161.3 pence per litre, the highest since November 2022.
Deutsche Bank Chief UK Economist Sanjay Raja stated that headline inflation was 0.25 percentage points above the Bank of England's forecast, while services inflation was 20 basis points above projections.
Raja expects inflation to approach 4% around the turn of the year due to an expected rise in energy prices, which he believes will lead to a strengthened likelihood of rate hikes.