UK September inflation jumps to 3.5%, solidifying BOE rate hike bets for November

• UK September CPI came in at 3.5%, against a 3.4% annual forecast.
• The prior reading was 3.1%.
• Core CPI for September hit 2.8%, matching the year-on-year expectation.
• This compared with a previous figure of 2.6%.

Headline annual inflation jumped as forecast over the past month, hitting a level not seen since October of the previous year.

Higher energy costs were the dominant factor, with transport—especially motor fuels—making the largest contribution to the increase in annual price pressures. The average price of petrol rose by 8.2 pence per litre from August to September 2026, compared with a decline of 0.2 pence per litre over the same period a year earlier. In September 2026, the average price stood at 169.5 pence per litre. This marked the highest price level since August 2022.

Alongside the headline figure, core prices also ticked up, with the annual rate reaching 2.8%. This element is expected to put pressure on the Bank of England to tighten policy further, reinforcing market expectations for a move in November. Breaking down the data, services inflation ran at 3.7% in September, up from 3.4% previously.

This suggests price pressures are broadening, or at least reaffirms the view that services inflation remains highly sticky and stubborn. In either case, it indicates the Bank of England cannot afford to let up in its battle against inflation.

Traders were already pricing in roughly 96% odds of a 25 bps rate hike for November, and the latest data is unlikely to alter that, as it only strengthens the market consensus. GBP/USD was trading little changed at 1.3365 on the day.