UK inflation jumps to highest in nearly a year at 3.5%

UK Inflation Rises to 3.5%, Pressure Mounts for November Rate Hike

UK Inflation Data and Economic Implications

Inflation Surpasses Expectations

LONDON, Oct 21 (Reuters) - British inflation rose by more than expected last month, according to data that is likely to intensify calls for support for households in next week's budget and add to the case for an increase in interest rates by the Bank of England in November.

Annual consumer price inflation rose by 3.5% in September after a 3.1% increase in August, the Office for National Statistics said on Wednesday.

A Reuters poll of economists had shown a median forecast of 3.4% as the surge in energy prices caused by the Iran war gathered more steam last month.

Factors Driving the Inflation Rise

September's rise, which the ONS said was due to higher petrol and diesel costs, took inflation to its highest since October 2025.

The BoE had predicted a smaller rise to 3.0% in forecasts it published in July.

Government and Bank of England Responses

Upcoming Budget and Household Support

Wednesday's inflation data release comes a week before finance minister John Healey's first budget when he is expected to offer some further support for households hit hardest by the jump in energy prices.

Underlying Price Pressures

Services and Core Inflation

Underlying price pressure also sped up.

Services price inflation - which the BoE views as a guide to underlying price pressures - jumped to 3.7% last month, up from 3.4% in August and higher than economists' forecasts of 3.6%.

Core inflation, which excludes food, energy, alcohol and tobacco prices, picked up to 2.8% from 2.6%, and was also above expectations.

Impact of Global Events on UK Inflation

Britain has been more affected than most Western countries by the war in the Gulf due to its heavy reliance on imported natural gas.

(Reporting by Suban AbdullaEditing by William Schomberg)