UK Inflation Hit 3.5% on Fuel. A Rate Rise Is Not Decided.

Britain's inflation rate rose to 3.5% in the year to September, the Office for National Statistics said on Wednesday, October 21. It was 3.1% in August, above the 3.4% economists polled by Reuters expected, and the third straight increase. Grant Fitzner, the ONS chief economist, said fuel was the main driver and diesel was at its highest price since July 2022. Airfares, computer games, and live events also contributed.

CNBC reported motor-fuel prices rose 29.8% over the year. Britain is a net energy importer, so a Middle East supply shock can reach transport costs. The inflation print does not itself change the Bank of England's rate. Pricing cited by CNBC put a 98% chance on a quarter-point rise to 4% next month, and many traders also priced a December rise. Those are bets, not a vote. National debt was reported above £3 trillion in September for the first time. Chancellor John Healey announced no bill cut on Wednesday.

Does 3.5% inflation mean British loan rates have already risen? No. It is September's price index, led by fuel. The Bank of England had not announced a new rate.