British Inflation Accelerates Beyond Forecasts, Reaching Highest Level Since October 2025

British consumer prices rose by 3.5% in the twelve months to September, the highest annual rate since October 2025, accelerating from 3.1% in August and surpassing expectations of a 3.4% increase. On a monthly basis, inflation eased slightly, with consumer prices rising 0.4% after a 0.5% increase in August.

Core CPI, which excludes volatile items such as food, energy, alcohol, and tobacco, increased by 2.8% year-on-year in September, up from 2.6% in the previous month and in line with market expectations.

Services inflation, a key measure closely watched by the Bank of England for signs of underlying price pressures, accelerated to 3.7% in September from 3.4% in August, exceeding the consensus forecast of 3.6%.

Producer price data also pointed to mounting inflationary pressures. Input Producer Prices, which measure the cost of goods and raw materials purchased by manufacturers, surged 8.3% year-on-year in September, up from 6.7% in August and well above expectations of 7.2%. Output Producer Prices, which track the prices charged by manufacturers for their goods, rose 4.6%, accelerating from 3.8% in the previous month and beating forecasts of 4.3%.

The stronger-than-expected rise in inflation is likely to increase pressure on the Bank of England to consider further policy tightening at its November meeting. The data may also strengthen calls for additional government support for households, which have been hit hardest by rising energy costs, widely seen as the main driver of inflationary pressures last month.