# Inflation increases to 3.1% after jump in petrol prices

By Danni Hewson — 2026-09-16

Danni Hewson, head of financial analysis at AJ Bell, fears there is worse to come.

She said: “Motorists will be hyper aware that prices have been rising at a budget-squeezing rate over the past few weeks.

“Petrol costs hit highs in August not seen since November 2022 after the ceasefire between Iran and the US collapsed and fears over oil supplies hit the headlines once again.

“People are already trying to cut back on the number of trips they make. The latest data on grocery sales from Worldpanel by Numerator showed 18 million fewer visits to supermarkets in the last tracked period.

“Holidaymakers were also impacted by rising airfares, with many families putting off booking until the last minute because of concerns earlier in the year about potential flight cancellations.

“But after our last uncomfortable brush with higher living costs, we know all too well that rising fuel prices are only the beginning of the story.

“Costs for goods have been slowly creeping up, and digging into the latest producer prices data it’s clear that what’s on the sticker today is likely to be higher in the months to come.

“Oil isn’t just a factor in transportation costs, it’s also an integral part in plastics and packaging. As AI becomes increasingly important for UK growth, the jump in metal prices is expected to continue to feed through to the price of key components such as AI chips which are in high demand.

“So far food prices have remained fairly subdued, with food inflation holding steady at 1.3 per cent. The price of goods like chocolate and sugar are not rising as fast as they were at the same time last year, although there are warnings that a poor harvest in the UK following this summer’s scorching heat and the potential impact of El Nino are likely to see cost pressures mount in the coming months.

“For the Bank of England, there are a few factors expected to play into tomorrow’s interest rate decision. Core inflation has held firm, as has service sector inflation, with a loose labour market creating pay restraint.

“Workers looking at rising prices are less likely to demand big pay hikes in the current climate because they’re nervous about the jobs market. Add in consumer caution and businesses worried about their spending and the upcoming UK Budget, and MPC members will need to walk a fine line or risk pushing the economy backwards.”

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