UK inflation crept up to a five-month high of 3.1% in August, placing the Bank of England under increasing pressure ahead of its interest rate decision on Thursday.
The figure was up from 2.9% the previous month.
Official data from the Office for National Statistics show transport, particularly motor fuels, made the largest upward contribution to the monthly change.
The average price of petrol rose by 9.1 pence per litre between July and August, compared with a rise of 0.3 pence per litre during the same period of 2025. The average price of petrol stood at 161.3 pence per litre in August, the highest level since November 2022.
Diesel prices also rose by 14.2 pence per litre in August, compared with a rise of 0.8 pence per litre last August.
The ONS said these movements resulted in overall motor fuel prices rising by 23% in the 12 months to August 2026.
Charlie Ambler, co-chief investment officer at Saltus, said the rise in inflation “places further pressure on the Bank of England to raise interest rates this year” at a time when policy remains finely balanced.
He said: “Last month, as the effects of the Iran conflict continued to filter through the economy, three MPC members voted for an immediate increase, citing second-round inflation effects. While history suggests central banks are better served looking through temporary supply shocks rather than tightening into them, the Bank faces a difficult balancing act.
“For investors, the question is how far rates will rise. We think a single increase to 4% by the end of the year is realistic, meaning portfolios built for falling rates will need to adapt, particularly in rate sensitive areas like gilts and domestically focused equities.”
Kevin Brown, savings expert at Scottish Friendly, commented: “Today’s reading supports policymakers who believe interest rates need to be higher.
“Although wage growth is not accelerating, data released yesterday showed the labour market remains subdued. And even though higher interest rates cannot directly bring down externally driven energy price rises, another rise in inflation leaves the Bank with much less room to look past those pressures and increases the risk that borrowing costs stay higher for longer.
“The possibility for consumers that both living costs and borrowing costs remain elevated makes building a financial buffer, reviewing savings rates, and considering longer-term investing where finances allow all the more important.”
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