The Office for National Statistics published figures on Wednesday 21 October 2026 showing the Consumer Prices Index rose to 3.5 per cent in the year to September, its highest level in almost a year, up from 3.1 per cent in August1. The Daily Record reported that transport costs, particularly petrol and diesel prices, were the biggest contributor to the increase1.
Motor fuel prices rose by almost 30 per cent in the year to September, compared with a 23 per cent annual rise in August, with average petrol prices at 169.5p per litre and diesel at 192.5p per litre, their highest levels in more than four years1. Food and non-alcoholic drink inflation was unchanged at 1.3 per cent, and food prices fell by 0.2 per cent between August and September1. The report said economists have warned inflation could climb above four per cent this winter, with Pantheon Macroeconomics forecasting a possible peak of 4.8 per cent in February1.
On energy, the report stated that Ofgem's energy price cap increased by four per cent in October1. It also said Prime Minister Andy Burnham has asked the Chancellor and Energy Secretary Miatta Fahnbulleh to look at removing standing charges from household gas bills, but no decision has been announced on the proposal or on how the costs currently covered by standing charges would be recovered1.
The Bank of England has held its base rate at 3.75 per cent since the end of 2025, and the report said economists increasingly expect an increase to four per cent when the Monetary Policy Committee meets next month1. Thomas Pugh, chief economist at RSM UK, said higher inflation and a stronger jobs market "almost guarantees an interest rate hike next month"1.
"New figures published on Wednesday by the Office for National Statistics(ONS) show the Consumer Prices Index (CPI) increased from 3.1 per cent in August"
The report said September's inflation figure is normally used by the UK Government when considering annual increases to benefits from the following April, and that the Scottish Government has generally used September's CPI for devolved benefits1. It said earnings growth of 3.9 per cent was higher than September CPI, so the Triple Lock means earnings will determine the State Pension increase from April 2027, with new rates expected to be confirmed in the Autumn Budget on 28 October1.
Why it matters for households
Inflation at 3.5 per cent means something that cost £100 in September last year would cost approximately £103.50 now, though individual bills can rise or fall at different rates1. For a home's energy costs, the reported four per cent October rise in the Ofgem price cap adds to wider price pressure, while the standing charge proposal remains undecided1. The report said 1,683 savings accounts currently pay rates above 3.5 per cent, and the average new savings rate was 3.78 per cent gross on 21 October1. For households with tracker or variable-rate mortgages, a base rate rise would feed through to repayments, while those on fixed-rate deals would not see monthly repayments change until their deal ends1. Background on how domestic energy prices have moved over time is set out in our guide to UK domestic energy prices over time, and the bodies that publish this data are listed in who publishes UK home energy data.
What happens next
The Bank of England's Monetary Policy Committee meets next month to decide whether to raise interest rates1. The Autumn Budget is due on 28 October, when April 2027 benefit and State Pension rates are expected to be confirmed1. No decision has been announced on removing standing charges from household gas bills1.