UK Inflation Hits Five-Month High at 3.1%

UK annual inflation rose to 3.1% in August 2026 from 2.9% in July, reaching a five-month high in line with economists’ expectations but exceeding the Bank of England’s 2.8% forecast. Motor fuel prices were the main driver, with petrol and diesel increases lifting transport inflation to 4.6%, while housing and household-services inflation also accelerated to 4.9%; food inflation held at 1.3%. Core inflation remained at 2.6%, with services inflation steady at 3.4%. The data came ahead of the Bank of England’s interest-rate decision and may complicate efforts to bring inflation back to its 2% target. Separately, regular pay excluding bonuses grew 3.5% annually in the three months through July, while inflation-adjusted regular pay rose 0.6%, indicating modest real wage growth.