UK inflation rises to 3.5% as Middle East conflict pushes diesel above £2 a litre
Consumer Prices Index inflation climbed to 3.5% in September from 3.1% in August, exceeding forecasts of 3.4%, in a pre-Budget blow to Chancellor John Healey as fuel costs surge amid conflict in the Middle East.
UK inflation accelerated more sharply than expected in September, reaching 3.5% as fuel prices surged amid the conflict in the Middle East, according to the Office for National Statistics. The rise in the Consumer Prices Index from 3.1% in August exceeded the 3.4% forecast by economists and delivered a setback to Chancellor John Healey a week before his first Budget.
The increase was driven in part by diesel prices climbing above £2 a litre, a consequence of disruption linked to the Middle East conflict. The ONS said annual price growth rose across September, with the fuel surge feeding through into the broader consumer basket. The reading marks the highest inflation rate in almost a year and comes amid fears among analysts that the rate could breach 4% next year.
The figures land at a sensitive political moment. Healey, preparing to deliver his first Budget as chancellor, now faces a narrower fiscal margin than anticipated, with higher inflation eroding the real value of spending plans and potentially complicating the government's economic strategy. The September inflation rate is also watched closely because it is typically used to decide the level at which many benefits are increased, meaning the higher reading could have knock-on effects for household incomes and public expenditure.
Economists had expected a smaller increase, and the overshoot underlines how external shocks are transmitting into domestic prices. The conflict in the Middle East has pushed up energy and transport costs, with diesel passing the £2-a-litre threshold — a symbolic and practical burden for businesses and consumers alike. The Bank of England will now weigh the persistence of these pressures as it considers the path of interest rates, while the Treasury assesses the implications for the public finances ahead of the Budget.
The ONS data showed the CPI rate rising from 3.1% in August to 3.5% in September, confirming the acceleration. With inflation now at its highest level in nearly a year, the government faces pressure to demonstrate that it can shield households from further cost increases while maintaining fiscal credibility. The coming weeks will be dominated by the Budget and by whether the fuel-driven spike proves temporary or signals a more entrenched inflationary trend.
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