UK inflation rose to 3.1% in August ahead of the Bank of England’s Sept. 17 decision.
Why it matters: The reading makes a near-term Bank of England hold more likely than a cut, which would keep borrowing costs elevated for households and businesses. Markets and mortgage pricing hinge on whether policymakers see inflation staying above target long enough to delay easing.
- UK annual CPI inflation rose to 3.1% in August from 2.9% in July, the Office for National Statistics said.
- The ONS published the data on Sept. 16, one day before the Bank of England’s Sept. 17 policy decision.
- Transport, especially motor fuels, made the biggest upward contribution to the monthly increase, according to the ONS.
- The Bank of England held Bank Rate at 3.75% in July in a 6-3 vote.
UK inflation rose to 3.1% in August, according to the Office for National Statistics, up from 2.9% in July. The release landed on Sept. 16, just before the Bank of England’s Sept. 17 policy decision.
The timing matters because the Bank held Bank Rate at 3.75% in July in a 6-3 vote, and policymakers are still weighing when inflation will move back toward target. In its July monetary policy summary and minutes, the Bank said it expected inflation to rise later in 2026 as higher energy prices feed through, while noting that monetary policy cannot affect global energy prices.
The ONS said transport, especially motor fuels, was the largest driver of the August increase. It also reported all goods inflation at 2.7%, up from 2.2%, while services inflation held at 3.4%.
The Bank’s August Monetary Policy Report said higher energy prices could add around 0.5 percentage points to CPI inflation in December 2026 in its central projection. For borrowers, that points to a slower path to rate cuts and a longer stretch of elevated lending costs.
By the numbers
- 3.1% - UK annual CPI inflation in August, up from 2.9% in July
- 3.75% - Bank Rate held by the Bank of England in July
- 0.5 percentage points - the Bank’s projected boost to CPI from higher energy prices in December 2026
Yes, but: The August rise was driven in part by transport and motor fuels, so the next policy signal depends on whether those pressures persist or fade.
What's next: The Bank of England is scheduled to announce its next policy decision on Sept. 17.