Petrol and Diesel Fuel Inflation - NIESR CPI Tracker
Main Points Today s ONS release indicates that annual CPI inflation came in at 3.5 per cent in September, up from 3.1 per cent in August. Core CPI (excluding energy, food, alcohol and tobacco) increased to 2.8 per cent in the 12 months to September, up from 2.6 per cent in August. The main driver of September s headline CPI inflation rate was transport, where growth rose to 6.6 per cent from 4.6 per cent in August, driven by diesel and petrol inflation accelerating to 35.8 and 25.6 per cent up, respectively, from 27.8 and 20.2 per cent in August. Upside risks continue to dominate as tensions in the Middle East push oil prices up near its five-month high, gas prices to their highest level since 2022 and diesel prices to surpass 2 per litre for the first time. This will likely keep inflation higher for longer, passing through to supply chains, food prices and household energy bills. While pay growth remains subdued and offers little evidence of second round effects, this month s better-than-expected GDP growth and unemployment data will provide the Bank of England more scope to tighten, hence, there is a good chance of a rise in November. For a breakdown of what inflation is and how
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Main Points Today s ONS release indicates that annual CPI inflation came in at 3.5 per cent in September, up from 3.1 per cent in August. Core CPI (excluding energy, food, alcohol and tobacco) increased to 2.8 per cent in the 12 months to September, up from 2.6 per cent in August. The main driver of September s headline CPI inflation rate was transport, where growth rose to 6.6 per cent from 4.6 per cent in August, driven by diesel and petrol inflation accelerating to 35.8 and 25.6 per cent up, respectively, from 27.8 and 20.2 per cent in August.
Upside risks continue to dominate as tensions in the Middle East push oil prices up near its five-month high, gas prices to their highest level since 2022 and diesel prices to surpass 2 per litre for the first time. This will likely keep inflation higher for longer, passing through to supply chains, food prices and household energy bills. While pay growth remains subdued and offers little evidence of second round effects, this month s better-than-expected GDP growth and unemployment data will provide the Bank of England more scope to tighten, hence, there is a good chance of a rise in November.
For a breakdown of what inflation is and how it is calculated, read our blog post here. Today's ONS figures show annual CPI inflation came in at 3.5 per cent in September, up from 3.1 per cent in August. Inflation has now risen for three months running, and with energy costs from the Middle East conflict still feeding through, it is likely to rise further. Higher fuel and transport costs will likely push up food prices, and January s large price cap increase will land as household energy demand peaks.
Given this, inflation could reach 4 per cent, double the Bank s target, by early 2027. The Chancellor will want to use next week s Budget to relieve the pressure on struggling households, but with gilt yields at multi-decade highs, rising borrowing costs limit his room to manoeuvre. As for the Bank of England, though subdued pay growth offers little evidence of second-round effects, better-than-expected unemployment and economic growth give the MPC more scope to tighten, and there is a good chance of a 25-basis point rise in November. Charlotte O'Leary, Associate Economist