UK inflation rises to 3.1%, as motor fuel costs jump – business live

UK inflation rises to 3.1%Newsflash: Inflation in the UK has risen, putting households under renewed financial pressure.The Consumer Prices Index, which measures the cost of goods and services across the economy, has risen to 3.1% in the year to August, up from 2.9% in July.On a monthly basis, CPI rose by 0.5% in August, driven by “Transport, particularly motor fuels”, the Office for National Statistics says.More to follow….Key events3m agoFactory gate inflation rises too11m agoAir fares jumped too12m agoMotor fuel prices surged 23% in August16m agoChart: How UK inflation was pushed up by transport costs20m agoUK inflation rises to 3.1%47m agoIntroduction: It's UK inflation dayFood and drink inflation remained low in August.The ONS reports that the 12-month inflation rate for food and non-alcoholic beverages was 1.3% in August 2026, unchanged from July. It was last lower than this in September 2021.Prices of chocolate confectionery rose by less than a year ago, while meat prices fell slightly in August.Factory gate inflation rises tooWorryingly, the cost of goods produced by UK factories rose at a faster rate in August too.Producer output prices – or the cost of goods at the ‘factory gate’ - rose by 3.7% in the year to August, up from 3.3% in July.ONS chief economist Grant Fitzner explains: double quotation mark“Rising crude oil and petrol prices increased both the annual cost of raw materials and the price of goods leaving factories respectively.” At 3.1% in August, UK inflation is now the highest since March, when CPI hit 3.3%.ONS chief economist Grant Fitzner says: double quotation mark“Sharp price rises for petrol and diesel pushed inflation up again in August. Higher airfares, particularly for long-haul journeys, also contributed to the increase. Air fares jumped tooAir fares rose by 6.2% between July and August 2026, the inflation report show.This was mainly due to long-haul routes where fares rose in August 2026, compared with a fall a year ago.Motor fuel prices surged 23% in AugustMotor fuel prices across the UK surged by 23% in the 12 months to August, today’s inflation report shows.That’s up from 15.5% in the year to July, with petrol prices hitting their highest level since November 2022.The Office for National Statistics reports that: the average price of petrol rose by 9.1p per litre between July and August, to an average price of 161.3p per litre. Diesel prices rose by 14.2p per litre in August, to an average of 181.8p per litre Chart: How UK inflation was pushed up by transport costs Photograph: Office for National StatisticsUK inflation rises to 3.1%Newsflash: Inflation in the UK has risen, putting households under renewed financial pressure.The Consumer Prices Index, which measures the cost of goods and services across the economy, has risen to 3.1% in the year to August, up from 2.9% in July.On a monthly basis, CPI rose by 0.5% in August, driven by “Transport, particularly motor fuels”, the Office for National Statistics says.More to follow….Sanjay Raja, chief UK economist at Deutsche Bank, has predicted UK inflation will rise in August to just over 3%.Raja told clients last week: double quotation markAfter broadly matching expectations in July, we see price momentum pushing up again in August. Some goods inflation, food inflation and a chunky rise in energy prices will likely see inflation take another small step higher to round up the summer. We’ll find out in 10 minutes if he’s right!Experts at Pantheon Macroeconomics have suggested that so-called “AI-flation” could also be a factor pushing up UK prices.Rob Wood, their UK economist, said Pantheon believe higher electronics prices, linked to chip shortages amid the AI boom, could add 0.2 percentage points to inflation.Introduction: It's UK inflation dayGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.We’re about to learn whether the UK’s cost of living squeeze tightened last month.Official linflation data due at 7am BST is expected to show the headline rate of UK inflation rose in August, further above the Bank of England’s 2% target.Economists forecast the Consumer Prices Index will have risen by around 3.1% last month, up from 2.9% in the 12 months to July.Higher fuel costs, due to the jump in the oil price since the Iran war began, are expected to have pushed up the cost of living again.Petrol and diesel prices are now at their highest level since the conflict began, with a visit to the pumps now the most expensive since 2022.A jump in inflation could put more pressure on UK government borrowing costs, which yesterday hit the highest level since 2007 as the bond market sell-off continued.Britain isn’t alone here, though – yesterday, the average 10-year bond yield for the Group of Seven largest economies hit its ⁠highest level since mid-2008.The UK also isn’t alone in having an inflation problem. Last week, US inflation was clocked at 3.4%, which is likely to encourage the Federal Reserve to raise interest rates tonight.The agenda 7am BST: UK inflation report for August 9.30am BST: UK housing prices and rents report 1.30pm BST: US retail sales report 7pm BST: Federal Reserve interest rates decision 7.30pm BST: Federal Reserve press conference