Higher fuel costs and air fares drove UK inflation up to 3.1% in the year to August, putting pressure on the Bank of England to raise interest rates.
Prices rose from 2.9% in the 12 months to July, according to the Office for National Statistics, which said transport, “particularly motor fuels”, made the largest upward contribution to the monthly change in inflation.”
In the transport division prices rose by 4.6% in the 12 months to August 2026, up from 3.6% in July.
“The average price of petrol rose by 9.1 pence per litre between July and August 2026, compared with a rise of 0.3 pence per litre between July and August 2025,” the ONS said.
Petrol and diesel prices increased further as the conflict in the Middle East continued to disrupt global oil supplies. The cost of flying also jumped during the key month for summer getaways.
Martin Sartorius, CBI lead economist, said: “With tensions escalating across the Middle East, we expect that increased energy costs and some passthrough to domestic prices will further push up inflation over the months ahead.
“Given the limited signs of a pick-up in domestic price pressures, the Bank of England’s Monetary Policy Committee is likely to keep interest rates unchanged at its next meeting.
“However, the renewed rise in energy prices means that the Committee will be increasingly alert to the risk of these costs feeding through to persistently elevated inflation.”
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