UK CPI Rises to 3.5% as Fuel and Services Inflation Grows

UK consumer price inflation rose to 3.5% in September from 3.1% in August, the Office for National Statistics said in its 21 October bulletin. Motor fuels supplied the largest upward push, while the annual rate for services also increased. The result leaves the Bank of England's 2% target further away ahead of its next interest-rate decision on 5 November.

The ONS said petrol rose by 8.2 pence a litre between August and September to an average 169.5 pence. Diesel increased by 10.7 pence to 192.5 pence. Across motor fuels, prices were 29.8% higher than a year earlier, compared with an annual rise of 23.0% in August. Those figures describe what households paid at the pump. They do not measure the effect of fuel alone on the headline CPI rate.

The comparison with last September matters. Overall transport prices fell by 0.4% this September, but they fell by 2.3% in September 2025. A smaller monthly fall this year helped lift the annual transport inflation rate from 4.6% to 6.6%. It would be misleading to describe every part of the rise in the 12-month rate as a price increase during September itself.

A wider test than the petrol pump

The fuel effect does not exhaust the inflation story. The ONS reported that CPI services inflation rose to 3.7% in September from 3.4% in August, while CPI goods inflation rose to 3.2% from 2.7%. Core CPI, which excludes energy, food, alcohol and tobacco, increased to 2.8% from 2.6%. The ONS pointed to transport services, particularly air fares, as the largest upward contribution to the change in the broader CPIH services rate.

Those movements matter because a rise limited to fuel could fade if pump prices stopped climbing, whereas a sustained increase across services would be harder to dismiss. The September release alone cannot show whether services pressure will persist. Some service prices are seasonal and the comparison with last year's monthly movements can shift the annual rate. The next readings will be needed to distinguish a lasting change from a one-month jump.

There were offsets. Food and non-alcoholic drink inflation held at 1.3% in September. The annual rate for restaurants and hotels eased to 3.8% from 4.1%, with hotels accounting for that downward contribution. The ONS said restaurants and hotels made the biggest overall downward contribution to the change in annual inflation, partly countering transport's upward pull.

The ONS's broader CPIH measure, which includes owner occupiers' housing costs, rose to 3.6% from 3.3%. Its services rate reached 3.9% from 3.6%, and its core rate increased to 3.1% from 2.9%. CPIH is the ONS's most comprehensive measure of household inflation, while CPI is the measure used for the UK's monetary policy target. The two should not be interchanged when assessing how far inflation stands from that target.

Housing also explains part of the gap between the measures. Owner occupiers' housing costs rose by 4.0% in the 12 months to September, up from 3.9% in August. The ONS says those costs account for roughly 18% of CPIH. They are not included in CPI, so a reader cannot simply add the CPIH housing figure to the CPI headline.

The Bank's November decision

At its September meeting, the Monetary Policy Committee voted 6-3 to hold Bank Rate at 3.75%. Three members favoured a rise to 4%. The minutes said inflation was likely to rise further and that policy would depend on the scale and duration of the energy shock and its effects on the wider economy. They also said there had been little evidence at that point of material second-round effects in prices and wages.

The September figures are new evidence on prices, not a decision by the committee. They show the direct fuel contribution has strengthened and that services inflation has moved higher. They do not, by themselves, establish that higher energy costs have become embedded in wage settlements or that any member will change their vote. The Bank's next scheduled decision is 5 November.

For households, the practical distinction is between a slower rate of inflation and falling prices. September's 3.5% CPI rate means the measured basket cost more than it did a year earlier, and at a faster annual pace than in August. Even if the annual rate declines later, that would not reverse the increases already paid. The immediate question for the Bank is whether the rise in fuel remains a temporary price shock or passes more durably into other costs and pay. September's broader services figures make that question more pressing, but they do not settle it.