UK Inflation Climbs to 3.1% in August as Fuel Prices Jump
CPI inflation rose to 3.1% in the 12 months to August 2026, from 2.9% in July, as motor fuel prices rose 23% on a year earlier. Diesel averaged 181.8p a litre, up 14.2p in a month.
By Entrepreneur Group · Published · Updated
UK consumer price inflation rose to 3.1% in the 12 months to August 2026, up from 2.9% in July, the Office for National Statistics reported on 16 September. Fuel was the main cause. Motor fuel prices were 23.0% higher than a year earlier, petrol averaged 161.3p a litre (up 9.1p in the month) and diesel averaged 181.8p (up 14.2p).
Prices rose 0.5% between July and August, compared with 0.3% in the same month of 2025. The CPIH measure, which includes owner occupiers' housing costs, rose to 3.3% from 3.1%.
Where the pressure came from
Transport was the largest upward contributor to CPI inflation, adding 0.69 percentage points. Its annual rate rose from 3.6% to 4.6%. Air fares also rose 6.2% in the month, a smaller upward effect. Small downward effects came from vehicle maintenance, rail fares, sugar and confectionery, and meat.
The underlying measures were steadier:
- Core CPI (excluding energy, food, alcohol and tobacco) was unchanged at 2.6%.
- Services inflation was unchanged at 3.4%.
- Goods inflation rose from 2.2% to 2.7%.
So, as in July, the rise came mainly from energy rather than from a broad increase in prices across the economy.
What happened next at the Bank of England
The figures arrived the day before the Bank of England's September decision. On 17 September the Monetary Policy Committee held Bank Rate at 3.75% by a 6–3 vote, with three members voting for a rise to 4%. Its summary said CPI inflation "is likely to rise further over coming quarters", and the minutes expect it to reach around 3¾% in the final quarter of 2026 and slightly above 4% in early 2027.
What it means for businesses that move goods or people
This section is editorial guidance, not financial advice.
- Delivery and logistics costs. Diesel rose 14.2p a litre in one month. If you run vans or buy delivery services, check whether supplier contracts include fuel surcharges and when they reset.
- Quotes and fixed prices. If you quote fixed prices for work weeks or months ahead, consider shorter validity periods or a clear fuel adjustment clause, and explain it to customers.
- Travel budgets. Air fares rose in the month. Review travel plans for the autumn and book early where trips are essential.
- Plan for more of the same. The Bank expects inflation to keep rising into early 2027. Build that into budgets rather than assuming the August figure is the peak.
The next CPI release, covering September, is due on 21 October 2026.
Frequently asked questions
What was UK inflation in August 2026?
CPI inflation was 3.1% in the 12 months to August 2026, up from 2.9% in July. CPIH was 3.3%, up from 3.1%.
How much did petrol and diesel cost in August 2026?
The ONS reports average prices of 161.3p a litre for petrol, up 9.1p in the month, and 181.8p for diesel, up 14.2p. Motor fuel prices were 23.0% higher than a year earlier.
Is UK inflation expected to keep rising?
The Bank of England's September minutes expect CPI inflation to reach around 3¾% in the fourth quarter of 2026 and slightly above 4% in the first quarter of 2027.
Sources
- ONS: Consumer price inflation, UK: August 2026 (16 September 2026) (reviewed 27 October 2026)
- Bank of England: Monetary Policy Summary and minutes, September 2026 (reviewed 27 October 2026)