UK inflation jumps to 3.5% — cementing rate hike expectations

A person shields themselves from the rain while walking near the Bank of England building on the day the Monetary Policy Committee lowered interest rates, in London, Britain, Dec.18, 2025. Toby Melville | ReutersU.K. inflation rose by a hotter-than-expected 3.5% in the 12 months to September, driven by the surging cost of motor fuels. Economists polled by Reuters had been forecasting an annual inflation rate of 3.4%. September's print marked a continuation of the U.K.'s upward trend for inflation, which came in at 3.1% in August and 2.9% in July. The September reading was the highest annual inflation figure in a year. The U.K.'s Office for National Statistics said on Wednesday that the motor fuel inflation rate had hit its highest level since August 2022, when fuel costs surged in the wake of Russia's full-scale invasion of Ukraine. Britain is a net energy importer, making it vulnerable to external energy shocks, such as the U.S.-Iran war and the subsequent struggle to move oil through the Strait of Hormuz. U.K. motor fuel prices surged 29.8% in the year to September, ONS data showed on Wednesday. The British pound was flat against both the euro and the U.S. dollar following the da...