Inflation and government borrowing highest for a year ahead of next week's Budget

The pace of UK price rises accelerated ahead of Chancellor John Healey's first Budget, pushed up by sharp increases in petrol and diesel prices.

The rate of inflation rose to 3.5% from 3.1% in the year to September, its quickest pace since October 2025, according to the Office for National Statistics (ONS).

The cost of filling up a vehicle has soared in recent months as conflicts in the Middle East and Europe continue to squeeze global oil supplies.

The inflation figures came as UK government borrowing jumped to nearly £25bn in September, adding to pressure on Healey as he gears up for the Budget.

Petrol prices in September were the highest since August 2022, the ONS said, while diesel also rocketed.

The average price of petrol rose by 8.2p per litre to 169.5p per litre between August and September, while diesel rose to 192.5p per litre.

Motor fuel prices overall rose by 29.8% in the period covered by the figures.

ONS chief economist Grant Fitzner said September's "notable" increase meant inflation was at its highest rate in almost a year.

The wars in the middle east and Ukraine have pushed up fuel prices. The effective closure of the Strait of Hormuz by Iran after US and Israeli attacks has severely disrupted a major global supply line for crude oil, while oil refining capacity has been hampered globally by Russian and Ukrainian attacks on each other's infrastructure.

As well as fuel prices, the increase was driven by rising prices for airfares, computer games and live events, Fitzner said.

With a week to go until he delivers the Budget, Healey said: "We know that price rises from conflicts in the Middle East and Europe are hitting Britain and countries worldwide."

He said the International Monetary Fund last week had praised the UK government for its "fiscal discipline", and that the government has just given the go-ahead for getting more gas from the North Sea's Jackdaw field .

The Budget on 28 October will "keep up this momentum", he said, by sticking to the government's self-imposed fiscal rules, and by driving "growth in every postcode, while giving businesses and families some breathing space".

But the figures came as the ONS said the government borrowed £25bn in September, £1.8bn higher than a year earlier, as higher inflation helped to push up debt interest costs.

Ruth Gregory, deputy chief UK economist at Capital Economics, said the borrowing figures "painted a dismal picture" ahead of Healey's Budget. She said the amount borrowed in September was higher than analyst expectations as well as spending watchdog the Office for Budget Responsibility (OBR)'s forecast.

"This reinforces our view that the Chancellor will deliver a cautious Budget on 28th October that has little net impact on the economy and leaves the toughest fiscal choices for next year," she said.