Annual CPI inflation rises to 3.5% in September, up from 3.1% in August, according to ONS figures published this morning. ONS chief economist Grant Fitzner said: "Inflation climbed notably in September to its highest annual rate in almost a year."
The figure is above the 3.4% median forecast in a Reuters poll of economists. It is also above the 3.0% the Bank of England predicted for September in its July forecasts.
Motor fuel was the biggest driver, with prices up 30% in the year to September after a 23% annual rise in August. Brit Brief reports the ONS puts the cause on the Iran war squeezing global oil and gas supplies.
The Chancellor, John Healey, said: "We know that price rises from conflicts in the Middle East and Europe are hitting Britain and countries worldwide." The ONS figures support his point about the Middle East, since war-related fuel costs drove the rise. He added: "In my Budget next week, I will keep up this momentum... Maintaining our fiscal discipline and drive for growth in every postcode, while giving businesses and families some breathing space."
Investors expect the Bank to raise Bank Rate to 4% next month. Reuters says that would be the first increase in three years. Reuters also reports Healey is expected to offer further support to the households hardest hit by the energy price jump on 28 October.