UK Inflation Hits 3.1%, Energy Shock Dominates Headline CPI

UK inflation rose to 3.1% in August, surpassing the 3% threshold and putting pressure on the Bank of England ahead of its interest-rate decision.

The increase in headline CPI was driven mainly by fuel prices, with transport inflation jumping from 3.6% to 4.6% and motor-fuel inflation surging from 15.5% to 23.0%.

Petrol prices increased by 9.1 pence per litre during August, while diesel climbed by 14.2 pence, reflecting the renewed energy shock hitting the UK economy due to global oil and gas price increases.

However, core CPI remained unchanged at 2.6%, and services inflation stayed at 3.4%, suggesting that the energy shock may not be translating into broad domestic inflation problems.