UK inflation hits 3.5% in September as borrowing surges a week before Budget
UK inflation rose to 3.5% in September, up from 3.1% in August, as government borrowing hit £24.5bn — both the highest of the year so far — a week before Chancellor John Healey's first budget.
UK inflation has climbed to its highest level of the year, reaching 3.5 per cent in the 12 months to September, up from 3.1 per cent in August, per the Office for National Statistics. Released on Wednesday, the reading came in above the 3.4 per cent economists had expected.
The numbers land exactly one week before Chancellor John Healey delivers his first budget on 28 October. The Treasury borrowed £24.5bn in September, up from £17.3bn in August — both the highest of the year so far, The Times reports — as Healey is expected to lift taxes on banks amid eroding fiscal headroom since the start of the Middle East war.
The same ONS release showed producer-price pressures building at the factory gate: input prices rose 8.3 per cent year on year — the largest increase since May 2026 — while output prices climbed 4.6 per cent, the largest rise since April 2023. Crude oil inputs were up 51.0 per cent and refined petroleum outputs up 63.3 per cent, with the ONS noting its data “continue to be affected by the conflict in the Middle East”.
The September CPI figure will also set next April’s uprating for many benefits. The state pension, meanwhile, is widely expected to rise 3.9 per cent under the triple lock, based on wage growth already published by the ONS (britbrief).
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