UK Inflation Hits 3.1% as Petrol Prices Jump 23% in August

UK consumer price inflation ran at 3.1% in the 12 months to August 2026, up from 2.9% in July and the first reading above 3% since March, according to the Office for National Statistics. Core CPIH inflation, which excludes energy, food, alcohol and tobacco, was unchanged at 2.9% — which is why the same release is being read both as a warning and as a relief on the eve of the Bank of England's rate decision.

Petrol did most of the work, not household bills

The ONS release attributes the increase mainly to fuel. CNBC reported that motor fuel costs surged 23% year on year and that average petrol prices rose by 9.1 pence per litre between July and August, putting them at their highest since November 2022; average diesel prices rose 14.2 pence per litre. Grant Fitzner, the ONS chief economist, said in comments carried by RTÉ that "sharp price rises for petrol and diesel pushed inflation up again in August," adding that higher airfares, especially on long-haul routes, also contributed.

This is where the wire framing needs care. The seed headline for this story pointed to soaring energy costs, and the October rise in domestic energy bills is real — but it has not happened yet and therefore cannot be in an August index. What August captures is pump prices and, per the ONS, air fares. RTÉ reported that measures excluding energy held stable, and noted that further increases are likely in coming months as domestic energy bills, which track global market prices with a lag, go up.

The monthly figure is the sharper one: the ONS said CPI rose 0.5% in August alone, against 0.3% in August 2025 — the base effect that lifted the annual rate. The same release shows the CPIH goods annual rate rising from 2.2% to 2.7% while the CPIH services rate was unchanged from July, when the CPI all-services rate stood at 3.4%.

The August numbers at a glance

Why one release supports two opposite conclusions

Read the headline rate and inflation is accelerating away from the 2% target. Read the core and services measures and the domestic pressure that monetary policy actually acts on has not moved. Both statements come from the same ONS bulletin. RTÉ headlined the data as offering some relief for the Bank of England for exactly this reason: an oil-driven price shock is a change in relative prices that mechanically raises the index, and it drops out of the annual comparison roughly a year later unless it feeds into wages and services prices.

The producer-price line is the reason not to dismiss the print entirely. Output prices — what factories charge, not what shoppers pay — rose 3.7% annually, above all forecasts and after an upward revision to July, per the ONS via RTÉ. Fitzner linked that to rising crude oil and petrol prices. Producer prices are an input cost measure, not a consumer measure, and the pass-through to CPI is neither automatic nor fully predictable in size or timing.

Not everyone reads the data as reassuring. MoneyWeek quoted Hal Cook, senior investment analyst at Hargreaves Lansdown, arguing that higher inflation adds weight to the three Monetary Policy Committee members who have favoured an increase, and that July economic growth of 0.4% against forecasts of 0% makes a rise to 4% before year-end more likely. That is an analyst's view, not a Bank projection. The Bank's own central projection from 30 July had CPI inflation peaking at around 3.2% in the fourth quarter of 2026, according to the House of Commons Library, which also noted the MPC's judgement that risks to that outlook were tilted to the upside.

What households face in October, and what the cap number hides

Ofgem's price cap for 1 October to 31 December 2026 is £1,723 a year for a typical direct-debit dual-fuel household, 4% above the current period. Two details matter for anyone comparing bills. First, the cap limits unit rates and standing charges, not the total bill — heavier users pay more than £1,723. Second, Ofgem states that there is no VAT on electricity from 1 October 2026 to 31 March 2027 and warns that costs cannot be compared directly with previous periods because of that change. So the 4% figure spans a VAT change, and the new cap arrives with electricity zero-rated.

For inflation arithmetic, that zero-rating pushes in the opposite direction to the cap increase over the winter, which is one reason the path from here is not simply "energy bills up, CPI up." What the published data does not tell us: how much of September's higher pump prices — MoneyWeek put the average above 169p a litre on 15 September — will show in the September index, whether oil prices hold, and how the MPC voted this month.

Dated events to watch

• 17 September 2026: the Bank of England announces Bank Rate at noon. Rates stand at 3.75%.
• 1 October 2026: Ofgem's £1,723 cap takes effect, alongside the zero VAT rate on domestic electricity that Ofgem says runs to 31 March 2027.
• 5 November and 17 December 2026: the remaining MPC decisions of the year, with the November meeting accompanied by a quarterly Monetary Policy Report.