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Wed, 21 Oct 2026

Wed, 21 Oct 2026 Inflation and government borrowing highest for a year ahead of next week's Budget

Inflation accelerated to 3.5% from 3.1% in the year to September, according to the Office for National Statistics (ONS).
UK inflation has hit its highest rate in almost a year, reaching 3.5% in September, driven by sharp increases in petrol and diesel prices. The price of filling up a vehicle has soared due to global oil supply disruptions caused by conflicts in the Middle East and Europe. As a result, the average price of petrol rose by 8.2p per liter to 169.5p per liter, while diesel increased to 192.5p per liter. Motor fuel prices overall rose by 29.8% between August and September. The UK government's borrowing also hit its highest level in a year, with £24.5bn borrowed in September, £1.8bn more than a year earlier. This means that the government has overspent by £6bn this financial year compared to official forecasts. The inflation figure will influence benefits and pensions in April, with the state pension likely to rise by 3.9%. Chancellor John Healey has promised to keep to Labour's commitment not to hike taxes while sticking to the party's fiscal rules. However, critics argue that the government has "lost control of the economy" and should use the Budget to tackle the deficit and reduce costs.