UK inflation has risen again, with the Consumer Prices Index increasing to 3.1% in the year to August 2026 as higher petrol, diesel and air fares pushed up household costs.
Figures published by the Office for National Statistics on Wednesday show CPI inflation increased from 2.9% in July to 3.1% in August, taking the headline rate further above the Bank of England's 2% target.
The increase comes a day before the Bank of England is due to announce its latest interest-rate decision.
Fuel prices push inflation higher
The ONS said transport costs provided the largest upward contribution to the change in the annual inflation rate.
Petrol and diesel prices rose sharply during August, reflecting higher global oil prices, while air fares also contributed to the increase.
ONS chief economist Grant Fitzner said sharp rises in petrol and diesel prices had pushed inflation higher again, with increased air fares, particularly for long-haul journeys, also contributing.
The annual inflation rate for transport rose to 4.6% in August.
Core inflation remains at 2.6%
Despite the increase in the headline CPI rate, measures of underlying inflation were more stable.
Core CPI inflation, which excludes energy, food, alcohol and tobacco, remained at 2.6% in August for the fourth consecutive month.
Services inflation, another measure closely watched by the Bank of England because of its relationship with domestic wage and price pressures, was unchanged at 3.4%.
CPIH, which includes owner-occupiers' housing costs, rose by 3.3% in the 12 months to August, up from 3.1% in July.
Factory costs also rising
Separate ONS producer-price figures showed increasing cost pressures further up the supply chain.
Producer input prices rose by 6.1% in the year to August, up from a revised 5.8% in July.
Factory-gate output prices increased by 3.7%, compared with a revised annual increase of 3.3% in July.
The ONS said refined petroleum products made the largest contribution to the rise in annual input-price inflation.
Inflation remains above Bank of England target
The latest CPI figure leaves inflation at 3.1%, compared with the Bank of England's 2% target.
The Bank's Monetary Policy Committee is due to announce its latest interest-rate decision on Thursday.
The inflation figures do not determine that decision on their own. Policymakers also consider measures including services inflation, wage growth, employment, economic activity and expectations for future price rises.
Healey points to international pressures
Chancellor John Healey said instability in the Middle East was affecting inflation internationally and feeding through into household bills, shopping and petrol prices.
His comments attribute part of the renewed inflation pressure to global energy markets.
The Government has argued that the UK economy remains resilient while acknowledging the effect higher global energy prices are having on households.
Cost-of-living pressure returns to focus
The rise from 2.9% to 3.1% means prices are increasing more quickly than they were in July, although it does not mean prices overall rose by 3.1% during August itself. CPI increased by 3.1% compared with the same month a year earlier.
The figures also show that the latest acceleration is concentrated significantly in energy-related and transport costs rather than a comparable increase across every part of the inflation basket.
Nevertheless, the renewed rise puts inflation and the cost of living back at the centre of the economic debate ahead of the Bank of England's rate decision and Chancellor John Healey's next Budget.