UK inflation has climbed back above 3%, reaching 3.1% in August, according to figures released by the Office for National Statistics. This marks an increase from 2.9% in July and matches forecasts by City economists.
The rise in inflation is attributed to soaring energy prices, which are reportedly fuelled by the Iran war. The oil price has recently reached $109 a barrel, contributing to increased costs for petrol and diesel in Britain.
The average price of petrol is close to 170p a litre, with diesel above 191p. This comes as the Bank of England prepares for a decision on interest rates on Thursday, against a backdrop of intensifying fighting in the Middle East and turbulence in global financial markets.
In July, the Bank of England maintained borrowing costs, warning that a further escalation in the Middle East conflict could push UK inflation to a peak of 4.5% by mid-2027.