UK inflation accelerates to 3.1% as diesel jumps 14 pence in a month — a day before the rate decision

The ONS published August inflation at 07:00 on Wednesday. Consumer prices rose 3.1% over the year — against 2.9% in July and 2.6% in June. That is a third consecutive monthly rise and the highest reading since March.

There is essentially one cause, and it is visible at any filling station: fuel. Diesel rose 14.2 pence a litre in a month, petrol 9.1. Petrol now costs more than at any point since November 2022.

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The figure lands exactly a day before the Bank of England announces its rate decision.

What exactly did the ONS publish?

Two indices, as always.

CPI — 3.1% in the 12 months to August, up from 2.9%. On the month, prices added 0.5%, against 0.3% in August a year earlier.

CPIH, the fuller index including owner occupiers' housing costs — 3.3%, up from 3.1%.

RPI, still used in some contracts and student loans — 3.4%.

Core inflation, excluding food, energy, alcohol and tobacco, stayed at 2.6% for a third month. Services did not move either: 3.4%. Goods, however, jumped from 2.2% to 2.7%.

Those three lines translate simply: domestic inflationary pressure did not build. What got dearer is what we buy, not what we make ourselves. The acceleration came from outside.

Why did transport rise?

Transport as a division added 4.6% over the year against 3.6% a month earlier. In August alone it rose 1.5%, where August 2025 saw 0.4%. The ONS names transport as the largest and almost only driver: other divisions moved little, and in both directions.

Within transport it all comes down to motor fuels, up 23.0% over the year, against 15.5% the previous month.

The cause sits outside Britain: oil prices since the Middle East conflict began on 28 February. The same conflict shows in another line — long-haul air fares rose 6.2% on the month, where a year ago at the same point they were falling. European routes barely moved.

What does that cost at one fill-up?

Take a 50-litre tank, at the ONS average prices.

Diesel. 167.6 pence a litre in July, 181.8 in August. A full tank: £83.80 before, £90.90 now. That is £7.10 more per fill-up.

Petrol. 152.2 pence in July, 161.3 in August. A full tank: £76.10 before, £80.65 now. A difference of £4.55.

For comparison: between July and August 2025 petrol rose 0.3 pence and diesel 0.8. Last year this line in the household budget simply did not move.

If you fill up weekly, August's diesel rise costs you roughly £370 a year.

What about food and household bills?

Food is the good news, and it has held for a third month. Food and non-alcoholic drinks — 1.3% over the year, the same as July. The rate was last lower in September 2021, at 0.8%.

One line stands out: sugar, jam, syrups, chocolate and confectionery eased to 0.6% annual growth against 2.5% in July — and against 11.9% as recently as October 2025. The chocolate inflation that squeezed household budgets for a year and a half is over.

Housing and household services, though, accelerated: 4.9% on CPI against 4.6% in July. Electricity, gas and other fuels are up 6.0% over the year and 0.9% in August alone. The ONS points to domestic heating oil and to fixed tariffs: people who renewed a fix over the summer renewed it dearer.

The rest: alcohol and tobacco 2.7%, communication 5.3%, education 5.1%, restaurants and hotels 4.1%, clothing and footwear just 0.2%, furniture and household goods 0.8%.

What does it mean for tomorrow's rate decision?

At noon on Thursday 17 September the Monetary Policy Committee announces the rate. It stands at 3.75% and has since 30 July, when the vote split 6:3 — three members were already voting to raise.

August's figure is the last the committee saw before voting, and it is awkward: 3.1% against a 2% target, three months of rises.

But there is another side, and it matters more for the forecast. Core inflation is parked at 2.6% and services at 3.4%; neither moved. The acceleration came from fuel — an external factor the Bank Rate does not touch. Raising rates over the oil price means punishing your own economy for someone else's war.

So what to watch tomorrow is less the decision than the vote count: it shows how many on the committee think fuel inflation will seep into everything else. There is no full Monetary Policy Report in September — only four of the year's eight meetings carry one.

Our detailed preview of the meeting is in the piece on the 17 September decision.

What does it mean for the state pension?

For now, that earnings win.

The state pension is uprated by the triple lock: the highest of average earnings growth for May to July, September CPI, or 2.5%. Earnings are known — 3.9%. August inflation at 3.1% is well below that, and if September holds at this level the uprating follows the earnings figure.

But August's acceleration means the September figure could come in higher still — and it is only 0.8 percentage points from 3.9%. What decides it is published on 21 October at 07:00.

What a 3.9% uprating does to the pension, and why it overtakes the tax-free allowance for the first time, we covered separately.

Why are there two figures, CPI and CPIH?

CPI excludes the cost of living in your own home. The Bank of England measures its 2% target against it, working-age benefits are uprated by it, and it is the one in the headlines.

CPIH is the same basket plus owner occupiers' housing costs and council tax. The ONS treats it as the most comprehensive measure, and it is almost always higher: 3.3% against 3.1% in August.

If you rent, CPI is closer to your life. If you own, CPIH is: owner occupiers' costs rose 3.9% over the year, and that line exists in your personal inflation but not in CPI.

For comparison with neighbours: Britain's 3.1% is above the flash estimates for France (2.7%) and Germany (2.9%).

What should you actually do?

If you drive a diesel, compare forecourts properly — the spread between them is wider than usual right now, and £7 a tank adds up. Supermarket stations and price-comparison apps pay off precisely in months like this.

If an energy fix ends this autumn, do not leave it: the electricity, gas and other fuels line is running at 6.0% a year and new fixes are being written dearer than old ones. On top of that, from 1 October the Ofgem cap rises from £1,663 to £1,723.

If you are on a tracker mortgage or your fix ends before winter, tomorrow's decision concerns you directly.

When is the next data?

September inflation — 21 October at 07:00. That is the number the pension is calculated from.

Between the September and November rate meetings, on 28 October, the Chancellor delivers the Autumn Budget.

The next rate decisions: 5 November, with a full Monetary Policy Report, and 17 December, the last of the year.

All the upcoming financial dates are collected in the ONLYWAY calendar.

Read also: The Bank of England decides on 17 September · What changes on 1 October