UK Inflation Jumps to 3.1% as Petrol and Diesel Costs Soar
By Aboki Forex —
UK inflation rose to 3.1% in August, its first reading above 3% since March, as gasoline and diesel prices surged. The Office for National Statistics (ONS) said motor fuel costs climbed 23% year on year, pushing pump prices to their highest levels since late 2022 amid the Iran war-driven energy shock.
The print was in line with economists' expectations. It lands ahead of the Bank of England's rate decision on Thursday.
Fuel Drives the Spike
The ONS said the spike was largely driven by rising motor fuel costs. Average gasoline prices rose by 9.1 pence ($0.12) per litre between July and August, putting average prices at their highest since November 2022. Average diesel prices rose by 14.2 pence per litre in August.
Earlier this week, British motoring body the RAC said petrol and diesel prices had hit, since the Iran war began, with both fuels now at prices not seen in four years. Crude oil prices hover above $100 a barrel.
The UK, a net importer of energy, is particularly vulnerable to external energy shocks. Motor fuel costs are feeding directly into the inflation number. The ONS data shows the pressure at the pump has not eased.
July Already Hot
Inflation had already risen to 2.9% in July, as a government-regulated price cap on energy costs was revised sharply upward. In August, the cost of electricity, gas and other household fuels jumped 6% year on year, the ONS said Wednesday.
August's 3.1% reading is the first above 3% since March. It comes after the July print of 2.9%. Prices are continuing to rise as crude oil prices hover above $100 a barrel.
Cost-of-Living Pressure Persists
The UK is still grappling with a cost-of-living crisis sparked by post-pandemic inflation and surging energy costs that arose in the wake of Russia's full-scale invasion of Ukraine in 2022. The country remains exposed to global energy markets because it imports more energy than it exports.
The Bank of England will now weigh the August inflation data at its Thursday meeting. The 3.1% print was in line with what economists expected.