UK Inflation Hits 3.1% as Fuel Prices Soar

UK inflation rose to 3.1% in August due to surging fuel prices, according to official figures from the Office for National Statistics (ONS). The Consumer Prices Index (CPI) increased by 0.2 percentage points from July's 2.9%. Economists predicted this rise and warn that it is likely a sign of an upward trend.

The main contributor to the inflation increase was petrol prices, which rose by 9.1 pence per liter between July and August to an average of 161.3 pence per liter. Diesel prices also increased by 14.2 pence per liter to 181.8 pence per liter.

Economists attribute the rise in fuel costs to the ongoing conflict in the Middle East, which has pushed up global oil and gas prices. Thomas Pugh, chief economist at RSM UK, predicts that inflation will peak at almost 4% in early 2027 before gradually dropping back to 2% in 2028.

The Bank of England's Monetary Policy Committee is likely to keep interest rates unchanged at its next meeting, according to Martin Sartorius, lead economist at the CBI. However, he warns that the renewed rise in energy prices increases the risk of persistently elevated inflation.