UK Inflation Rate Accelerates in August

The UK’s annual inflation rate rose to 3.1% in August 2026, the highest in five months, in line with market expectations and up from 2.9% in July. Transport costs made the largest upward contribution to the annual rate, with inflation rising to 4.6% from 3.6% in July, driven particularly by motor fuels. Petrol prices rose 9.1 pence per litre from a month earlier to 161.3 pence, while diesel prices increased 14.2 pence to 181.8 pence, pushing motor fuel inflation to 23.0% from 15.5%. Inflation also rose for housing and household services (4.9% vs 4.6%), communication (5.3% vs 5.0%), and recreation and culture (1.6% vs 1.4%). Meanwhile, food inflation was unchanged at 1.3%. Core CPI inflation held at 2.6%, with goods inflation rising to 2.7% from 2.2% and services inflation unchanged at 3.4%. On a monthly basis, consumer prices rose 0.5%, the most in four months, matching forecasts and accelerating from 0.3% in July.

The UK’s annual inflation rate rose to 2.9% in July 2026, the highest in four months, from 2.6% in June and in line with market expectations. The largest upward contribution came from housing and household services (4.1% vs 2.7% in June), reflecting the 13% hike in Ofgem’s energy price cap that took effect last month. Gas prices surged 14.7%, the biggest increase since October 2022, while electricity prices rose 3.6%. Prices also rebounded for furniture and household goods (1.0% vs -0.2%) and clothing and footwear (0.5% vs -0.5%), while inflation increased for alcohol and tobacco (2.5% vs 2.1%) and health (3.7% vs 2.5%). Meanwhile, transport inflation slowed (3.6% vs 5.7%) due to lower motor fuel prices, particularly diesel. The average price of diesel fell by 8.8 pence per litre between June and July 2026. Food inflation also eased to 1.3% from 1.7%. On a monthly basis, the CPI increased 0.3%, matching market forecasts and following a 0.1% rise in June.

The annual inflation rate in the UK eased to 2.6% in June 2026 from 2.8% in May, slowing more than the expected fall to 2.7%. This marked the lowest reading since March 2025, driven by moderating transport inflation (5.7% vs. 6.8% in May), with the largest downward contribution coming from motor fuels, particularly diesel. The average price of diesel fell by 10.7 pence per litre between May and June, reaching 176.4 pence per litre, while petrol prices declined by 2.1 pence to 155.3 pence per litre. Food inflation also cooled to 1.7%, the lowest since August 2024, from 2.2%, with the largest drag coming from sugar, jam, syrups, chocolate, and confectionery. Inflation also eased for alcohol and tobacco (2.1% vs. 2.4%), while prices declined for clothing and footwear (-0.5% vs. 0.2%) and furniture and household goods (-0.2% vs. -0.1%). On a monthly basis, consumer prices rose 0.1%, in line with forecasts, following a 0.2% increase in May.