UK inflation rose in August as a significant surge in petrol and diesel costs hit motorists at the pumps. Figures released on 16 September 2026 by the Office for National Statistics (ONS) show that the Consumer Prices Index (CPI) rose to 3.1% in the year to August, up from 2.9% in July.
The rise was primarily driven by motor fuels. The average price of petrol increased by 9.1p per litre during August to reach 161.3p, while diesel prices saw an even sharper jump of 14.2p to hit 181.8p per litre. Overall, motor fuel prices were 23.0% higher in the 12 months to August 2026, compared to a 15.5% annual increase recorded in July.
Analysis from the RAC Foundation suggests that drivers have been facing a substantial “war premium” following the outbreak of conflict in the Middle East on 28 February 2026. The foundation estimates that UK motorists have paid an additional £7.5 billion in fuel costs since the start of the conflict.
Pressure on the Bank of England
The rise in headline inflation comes just 24 hours before the Bank of England is scheduled to make its latest decision on interest rates. The central bank’s benchmark rate currently stands at 3.75%, and tomorrow’s announcement on 17 September 2026 will be closely watched by homeowners and businesses.
Despite the headline increase, there were signs of stability in other areas of the economy. Core CPI inflation—which excludes volatile elements such as energy, food, alcohol, and tobacco—remained steady at 2.6% in August.
In addition to fuel, the ONS noted that air fares contributed to the upward pressure on inflation. Fares rose by 6.2% between July and August, largely driven by the cost of long-haul routes during the peak summer holiday period.
While the headline rate of 3.1% remains above the Bank of England’s 2% target, the stability of core and services inflation may provide some reassurance to policymakers as they weigh up whether a further change to the base rate is required to manage the cost of living.
