What's happened
Inflation has edged up to 3.1% in August, driven by higher fuel prices and long-haul air travel, according to the ONS. Economists forecast further increases in the coming months, with energy costs and the global outlook shaping households’ budgets ahead of autumn measures.
What's behind the headline?
Analysis
- The headline may understate how quickly energy and transport costs are feeding through to households.
- The data imply energy price caps and global energy tension will influence inflation into early 2027.
- Readers should anticipate a higher cost-of-living narrative in the autumn budget cycle, with potential policy responses centered on energy support and tax adjustments.
What this means now
- Inflation is likely to continue rising in the near term as energy costs stay elevated and airfares remain up.
- Households should monitor energy bills, fuel prices, and travel costs as these are the main drags on consumer prices.
How we got here
The Office for National Statistics reports August 2026 CPI at 3.1%, up from 2.9% in July. Fuel costs have been the primary driver, with petrol and diesel rising, while food inflation remains subdued. The Bank of England faced expectations of higher rates as energy prices remain elevated amid geopolitical tensions in the Middle East.
Our analysis
The Independent reports on CPI reaching 3.1% in August with fuel and airfares as primary drivers. The Scotsman highlights the Bank of England’s rate decision context amid the inflation uptick. Across outlets, there is consensus that energy prices will shape inflation in the near term. Direct quotes: "inflation has risen due to fuel costs" (Independent), "airfares have increased due to long-haul travel" (Independent, Scotsman).
Go deeper
- Will households see relief from energy bills in the coming months?
- How might the Bank of England respond in terms of rates if inflation persists?
- What specific measures could be introduced in the autumn budget to offset rising costs?
More on these topics
-
John Healey - Shadow Secretary of State for Defence of the United Kingdom
John Healey is a British Labour Party politician serving as Member of Parliament for Wentworth and Dearne, formerly Wentworth, since 1997 and Shadow Secretary of State for Defence since 2020.
-
Office for National Statistics
The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.
-
diesel fuel - Fuel
Diesel fuel in general is any liquid fuel used in diesel engines, whose fuel ignition takes place, without any spark, as a result of compression of the inlet air mixture and then injection of fuel.
-
Gasoline - Refined petroleum liquid used primarily as fuel
Gasoline (North American English) or petrol (Commonwealth English) is a petrochemical product characterized as a transparent, yellowish and flammable liquid normally used as a fuel for spark-ignited internal combustion engines. When formulated as a fuel for engines, gasoline is chemically composed of organic compounds derived from the fractional distillation of petroleum and later chemically enhanced with gasoline additives. It is a high-volume profitable product produced in crude oil refineries. The ability of a particular gasoline blend to resist premature ignition (which causes knocking and reduces efficiency in reciprocating engines) is measured by its octane rating or performance number. Tetraethyl lead was once widely used to increase the octane rating but is not used in modern automotive gasoline due to the health hazard. Aviation, off-road motor vehicles, and some racing car engines still use leaded gasolines. Other substances are frequently added to gasoline to improve chemical stability and performance characteristics, control corrosion, and provide fuel system cleaning. Gasoline may contain oxygen-containing chemicals such as ethanol, MTBE, or ETBE to improve combustion.
-
Bank of England - Bank in London, England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.
-
Oil
An oil is any nonpolar chemical substance that is a viscous liquid at ambient temperatures and is both hydrophobic and lipophilic. Oils have a high carbon and hydrogen content and are usually flammable and surface active. Most oils are unsaturated lipids
-
Pantheon Macroeconomics
Pantheon Macroeconomics is an economic research consultancy founded by Wall Street Journal Economic Survey 2014 US forecaster of the year, Ian Shepherdson. The firm is located in Newcastle upon Tyne, England.
-
United Kingdom - Country in Europe
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northwestern coast of the European mainland.