- UK September CPI +3.5% vs +3.4% y/y expected
- Prior +3.1%
- UK September core CPI +2.8% vs +2.8% y/y expected
- Prior +2.6%
As expected, headline annual inflation surged in the Uk during the past month with the reading being the highest since October last year.
Higher energy costs are the main culprit here as transport, particularly motor fuels, made the largest upward contribution to the change in annual price pressures. Of note, the average price of petrol rose by 8.2 pence per litre between August and September 2026, compared with a fall of 0.2 pence per litre between August and September 2025. The average price stood at 169.5 pence per litre in September 2026. This is the highest price recorded since August 2022.
Besides the rise in headline prices, core prices also showed an uptick with the annual estimate climbing to 2.8%. This is one spot that will pressure the BOE to tighten policy further, reinforcing market expectations of a move in November next. Looking at the details, services inflation continues to run up to 3.7% in September from 3.4% previously.
As such, that is a hint that price pressures are broadening and if not, it just reaffirms the notion that services inflation is still extremely sticky and stubborn. But whatever the case, it just means the BOE cannot rest on their laurels in trying to battle against the inflation monster.
Traders had already priced in roughly 96% odds of a 25 bps rate hike for November, so the report here will do little to change that as the numbers only help to reinforce the market view. GBP/USD is still trading little changed at 1.3365 on the day currently.
This article was written by Justin Low at investinglive.com.