UK inflation and borrowing climb before Healey’s first budget
TLT•UK annual consumer price inflation rose to 3.5% in September from 3.1% in August, above the 3.4% forecast by economists and the Bank of England’s 3% projection. Government borrowing also exceeded forecasts, and public debt passed £3 trillion.
1. Inflation rises faster
Consumer price inflation reached 3.5% in the 12 months to September, its highest level since October 2025, the Office for National Statistics said. Higher petrol and diesel costs drove the increase. Services inflation rose to 3.7% from 3.4%, while inflation excluding food, energy, alcohol and tobacco climbed to 2.8% from 2.6%.
2. Borrowing and debt
Separate figures showed government borrowing exceeded forecasts and public debt passed £3 trillion, with higher debt costs linked to inflation. Finance minister John Healey is expected to offer some further support for households hit hardest by energy prices, but his options are limited by the government’s fiscal rules.
3. Rate hike expectations
Investors and many analysts expect the Bank of England to raise its benchmark Bank Rate to 4% on November 5. Factory gate prices rose 4.6% in the year to September, the largest increase since April 2023, while manufacturers’ input costs rose 8.3%.
