Inflation rose to 3.5% in September, with higher petrol and diesel prices adding to pressure on household budgets.
UK inflation rose more sharply than expected in September, adding pressure to household budgets and uncertainty for mortgage borrowers. The figures come as many households face higher bills and lenders continue to increase their mortgage rates.
The Office for National Statistics (ONS) said Consumer Price Index (CPI) inflation was 3.5% in September, up from 3.1% in August. This is the highest annual inflation rate since October 2025. CPI inflation covers items such as food and non-alcoholic drinks, bread, meat, clothing, housing and household services, and transport.
Fuel prices posing a challenge
Fuel was a major factor in the increase. Petrol averaged 169.5p a litre in September, up 8.2p from August and the highest level since August 2022. Diesel rose to 192.5p a litre on average. Disruptions to global oil supplies have pushed fuel prices higher, increasing costs for drivers and businesses that rely on transport.
Higher fuel costs can add to pressure on the wider cost of living. Businesses may face more expensive deliveries and services, while households have less money for other bills and spending. Government borrowing also rose to almost £25 billion in September, adding to the financial pressures facing the Chancellor ahead of the Autumn Budget, due on 28 October.
Base rate review
Inflation matters to mortgage borrowers because the Bank of England considers price rises when deciding whether to change its base rate. September’s figure was higher than many expected. No one can say for sure what will happen, but this may lead to a base rate increase on 5 November.
Around 1.8 million fixed-rate mortgages are due to end this year, including many arranged when borrowing costs were much lower. If your deal is ending in the next six months, seek advice now. Reviewing your options early gives you time to plan for any change in your monthly payments. We’re here to help.