Rising fuel prices push UK inflation to 3.5% ahead of Budget

UK inflation accelerated to 3.5% in the year to September, increasing pressure on Chancellor John Healey before the Budget on 28 October.

Prices had risen by 3.1% in the year to August. The Office for National Statistics said September’s rate was the highest since October 2025.

Petrol reached 169.5p per litre

Average petrol prices rose by 8.2p per litre between August and September to 169.5p, while diesel reached 192.5p. Motor fuel prices overall increased by 29.8%.

ONS chief economist Grant Fitzner said airfares, computer games and live events also contributed to the increase. The source links the rise in fuel costs to disruption affecting global oil supplies and refining capacity.

Borrowing exceeded the forecast

The government borrowed £24.5bn in September, £1.8bn more than a year earlier. Borrowing for the financial year so far is £6bn above the Office for Budget Responsibility’s forecast, with higher inflation pushing up debt-interest costs.

Although total government debt passed £3tn for the first time, debt as a share of economic output fell. That is the measure the government uses to assess compliance with its fiscal rules.

Budget scheduled for 28 October

Healey has promised to follow the government’s fiscal rules and not raise income tax, National Insurance or VAT. He said the Budget would support growth and give businesses and families more breathing space.

September’s inflation rate will also help determine benefit increases in April. The state pension is expected to rise by 3.9% under the triple lock, while personal independence payment and carer’s allowance must be adjusted in line with the consumer price index.

Shadow chancellor Andrew Griffith said higher inflation and borrowing showed that Labour had lost control of the economy. Ruth Gregory, deputy chief UK economist at Capital Economics, expected a cautious Budget with little net effect on the economy.