Chancellor John Healey (Image: Getty)
UK inflation rose to 3.1% in August, up from 2.9% a month earlier. Surging fuel prices helped drive up the figure, which was in line with predictions and points to an upward trajectory in inflation since it struck a 15-month low of 2.6% in June.
Economists expected the new UK Consumer Prices Index (CPI) inflation figures would likely show the early impact of the breakdown of the US-Iran ceasefire. Grant Fitzner, the Office for National Statistics’ chief economist, said: “Sharp price rises for petrol and diesel pushed inflation up again in August. Higher airfares, particularly for long-haul journeys, also contributed to the increase.”
Surging fuel prices helped drive UK inflation last month (Image: Getty)
The ONS said transport, “particularly motor fuels”, made the “largest upward contribution” to the inflation change.
It warned petrol prices last month were the highest in almost four years, while overall fuel prices had risen by 23% in the 12 months to August — compared with a rise of 15.% the previous month.
The ONS said: “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.
Inflation increased to 3.1% in August, the ONS said (Image: Getty)
“The average price stood at 161.3 pence per litre in August 2026. This is the highest price recorded since November 2022.”
Diesel prices rose by 14.2 pence per litre in August, compared with an increase of 0.8 pence per litre a year earlier. The average price last month was 181.8 pence per litre, the ONS added.
Oil and gas prices have ticked higher since the US-Iran ceasefire deal collapsed on July 8.
Responding to the inflation announcement, Chancellor John Healey said the conflict in the Middle East is “impacting on inflation worldwide, not just here at home”. He said this is being seen in bills, weekly shops and at fuel pumps.
However, he insisted the British economy is “proving resilient” and said Labour is taking steps to help the public. “We have taken early action to help give families and businesses breathing space, by cutting tax on electricity bills, capping bus fares at £2 and lowering rates for pubs, social clubs and live music venues,” Mr Healey added.
Prime Minister Andy Burnham and Mr Healey have made tackling the cost of living a priority.
Meanwhile, the ONS described a “much smaller upward effect” on inflation from air fares, specifically long-haul routes.
Air prices rose by 6.2% between July and August, compared with an increase of 2.1% 12 months earlier. Food inflation, which had previously been soaring, remained steady at 1.3%. The rate was last lower in September 2021, at 0.8%, according to the ONS.
Dr Liliana Danila, chief economist at The Food and Drink Federation (FDF), said the figure remained the same because the food industry is “straining to find further efficiencies and keep costs as low as possible for shoppers”.
Dr Danila added: “However, the cost pressures caused by war in Iran, droughts across the UK and Europe, and El Niño are still very real challenges for food and drink manufacturers. We expect these to filter through into prices in shops.”
Projections of rising inflation have heightened expectations that the Bank of England could raise interest rates in the coming months.
The Bank’s Monetary Policy Committee (MPC) is set to announce its latest interest rate decision on Thursday.