UK Inflation Hits Five-Month High on Fuel Costs and Airfares

UK inflation surged to a five-month high of 3.1% in August, driven by a sharp increase in fuel costs due to the ongoing conflict in the Middle East.

The Consumer Price Index (CPI) rose 0.5% on a monthly basis and 3.1% over the past year, exceeding the median forecast of economists polled by Reuters.

Petrol prices jumped 9.1 pence per litre to an average of 161.3 pence per litre, while diesel prices climbed even higher at 14.2 pence per litre to an average of 181.8 pence per litre.

Airfares also contributed to the upward pressure on inflation in August, which is typically a peak travel month.

The Bank of England's forecast that annual inflation would stand at 2.8% in August was overshot by three-tenths of a percentage point, but policymakers are expected to keep interest rates unchanged at 3.75% this week.