UK inflation rose to 3.1% in August as higher transport and fuel prices pushed up consumer prices, while retailers continued to face pressure from rising operating costs.
The Consumer Prices Index (CPI) increased from 2.9% in July to 3.1% in August, according to the UK Office for National Statistics (ONS). Consumer prices rose 0.5% during the month.
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The Consumer Prices Index including owner occupiers’ housing costs (CPIH), the ONS’s most comprehensive measure of inflation, increased to 3.3% in the 12 months to August, from 3.1% in July.
Transport, particularly motor fuels, made the largest upward contribution to the change in the annual inflation rate.
The figures come as the British Retail Consortium (BRC), a UK retail industry body, warns that retailers continue to face higher energy, employment and packaging costs, alongside pressure from business rates, a tax on commercial property in the UK.
Fuel prices drive inflation higher
Transport prices rose 4.6% in the year to August, accelerating from 3.6% in July. Prices increased 1.5% during August alone.
Motor fuels accounted for the largest upward effect.
Average petrol prices increased by 9.1 pence per litre between July and August to 161.3p per litre, their highest level since November 2022. Diesel prices rose by 14.2p to 181.8p per litre.
Overall motor fuel prices were 23% higher than a year earlier, compared with annual growth of 15.5% in July.
Air fares also contributed to the increase, rising 6.2% between July and August. The ONS said the upward effect came from long-haul routes.
Food inflation remains unchanged
Food and non-alcoholic beverage inflation remained at 1.3% in August, unchanged from July.
The category contributed 0.11 percentage points to annual CPIH inflation, its smallest contribution since September 2021.
Housing and household services inflation, meanwhile, increased from 4.1% in July to 4.3% in August.
The latest data show that the increase in headline inflation was concentrated in particular categories rather than reflecting a similar acceleration across consumer prices.
Core inflation holds steady
Measures of underlying inflation remained unchanged in August.
Core CPI, which excludes energy, food, alcohol and tobacco, held at 2.6%, while services inflation remained at 3.4%.
Goods inflation increased from 2.2% to 2.7%, its highest level since September 2025. The ONS said energy, particularly liquid fuels, vehicle fuels and lubricants, made a large upward contribution to the change.
Core CPIH remained at 2.9%, while CPIH services inflation was unchanged at 3.6%.
Retail prices also rise
Separate BRC data show that shop price inflation increased to 1.5% year on year in August, from 0.9% in July and its highest level in more than two years.
Food inflation under the BRC measure increased to 2.8%, from 2.2% in July, while non-food inflation rose to 0.9% from 0.2%.
Ambient food inflation, covering packaged and processed food products, increased to 2.5% from 1.1%.
BRC chief executive Helen Dickinson said higher energy, input and commodity costs were beginning to feed through into retail prices, particularly for ambient foods, which are often imported and processed.
The BRC’s shop price measure is separate from the ONS CPI. It tracks prices in retailers’ shops, while CPI measures changes in the price of a broader basket of goods and services purchased by households.
Retailers face higher costs
The BRC said retailers continued to operate in a challenging cost environment and called on the UK government to address business costs in its upcoming Autumn Budget, the government’s main annual fiscal policy statement.
Harvir Dhillon, lead economist at the BRC, said: “Rising inflation means that businesses will expect their rates bill to rise even faster in April, adding to the cost pressures already being felt from high energy bills, employment costs, and packaging fees.”
The BRC has called on the Chancellor of the Exchequer, the UK’s finance minister, to freeze business rates, arguing that this would help limit additional costs for retailers.
Separate ONS producer price data point to continued cost pressures further up the manufacturing supply chain.
Prices paid by UK manufacturers for materials and fuels rose 6.1% in the year to August, up from a revised 5.8% in July. Factory-gate prices, which measure prices received by manufacturers for their products, increased 3.7% year on year, up from a revised 3.3% in July.
Retail demand remains subdued
Higher costs come as UK retail sales growth remains relatively weak.
BRC data show that total retail sales increased 0.7% year on year in August, compared with 3.1% growth in August 2025 and below the 12-month average of 1.6%.
Food sales increased 2.6%, while non-food sales declined 0.8%.
The figures leave retailers balancing higher operating costs with relatively subdued sales growth and pressure to maintain competitive prices.
UK CPI inflation is now above the Bank of England’s 2% target, while core CPI and services inflation remained unchanged in August. The next ONS consumer and producer price inflation releases are scheduled for 21 October 2026.
