Petrol up 9.1 pence a litre as inflation rises to 3.1% and squeezes budgets

Inflation rose to 3.1% in August, up from 2.9% in July, according to the Office for National Statistics (ONS). The biggest push came from the fuel pump. The ONS said the average price of petrol climbed by 9.1 pence per litre between July and August, to 161.3 pence per litre.

Diesel drivers were hit even harder. The official figures show the average diesel price rose by 14.2 pence per litre to 181.8 pence per litre over the month. For anyone who relies on a car to get to work, the shops or family, that money goes before anything else in the household budget has been paid.

The figures have started a political row over who is to blame. The Conservatives point at Labour's tax and energy policies, unions point at energy companies and banks, and retailers point at business rates. Meanwhile economists expect inflation to keep rising over the coming months, according to the Daily Express.

Why fuel and flights pushed inflation up in August

The Consumer Prices Index tracks how fast the cost of everyday goods and services is rising. Grant Fitzner, chief economist at the ONS, said sharp price rises for petrol and diesel pushed inflation up again in August. He added that higher airfares, particularly for long-haul journeys, also contributed to the increase.

Behind the jump at the pumps is the global oil market. The Daily Express reported that higher fuel costs reflect the early impact of the US-Iran ceasefire breaking down in July, which led to a fresh rise in oil and gas prices. Economists quoted in the report predict that ongoing pressure from the conflict in the Middle East will push up the cost of living further.

Andrew Griffith, the Shadow Chancellor, said every family was paying the price for Labour's choices. He claimed that what he called Labour's jobs tax and employment red tape were being passed on to consumers in the weekly shop, and called the government's energy policies "mad". The reports did not include a response from the government.

Who feels the rise most

Drivers are the most obvious losers, and diesel drivers most of all, because the diesel price rose by more pence per litre than petrol did. People booking long-haul flights will notice too, as the ONS singled out airfares as a second reason for the rise.

The squeeze reaches well beyond the forecourt. Unite general secretary Sharon Graham said energy bills are set to be the highest they have been in three years and that mortgage rates are spiking. She said prices have risen by 40 per cent over a decade and that workers are "sick of paying for crises they did not cause".

Shop owners say they are under pressure as well. Harvir Dhillon, Lead Economist at the British Retail Consortium, said retailers were doing all they could to hold prices down but would be "fighting with one hand tied behind their back" until fiscal conditions improve. He said business rates were perhaps the most significant cost, with retailers paying a disproportionate share of the total rates bill.

Key numbers

• 3.1%: Consumer Prices Index inflation in August, according to the ONS.
• 2.9%: the inflation rate in July, before the latest rise.
• 9.1 pence per litre: the increase in the average petrol price between July and August.
• 161.3 pence per litre: the average price of petrol in August.
• 14.2 pence per litre: the increase in the average diesel price over the same month.
• 181.8 pence per litre: the average price of diesel in August.
• 40 per cent: how much prices have risen over a decade, according to Unite.

What happens next: pressure builds ahead of the Autumn Budget

The next big moment is the Autumn Budget. The British Retail Consortium wants the Budget to reset and reduce the cost pressures on shops, especially business rates. Unite has called on the Chancellor, John Healey, to unfreeze tax thresholds so workers keep more of their pay, and to take back energy profits to subsidise household and industrial bills.

None of these demands has been agreed, and the reports did not give a date for the Budget. For now nothing changes. Economists expect inflation to keep rising over the coming months while the Middle East conflict keeps pushing up oil and gas prices.

What you can do now

With petrol and diesel prices moving sharply, compare prices at nearby forecourts before you fill up instead of using the same station out of habit. Prices can vary between stations, so a quick check before a long journey could save you money.

If you are planning a long-haul trip, remember that the ONS named higher airfares as one reason inflation rose, so check fares carefully before you book. Household energy is another pressure point. Unite warns that bills are set to be the highest in three years, so make sure your meter readings are up to date and you know what tariff you are on.

If rising costs are making it hard to keep up, contact your energy supplier or mortgage lender early, before arrears build up. People on fixed or lower incomes should also check they are receiving all the support they are entitled to.

Your questions answered

Why has petrol gone up so much?

The Daily Express reported that the jump reflects the early impact of the US-Iran ceasefire breaking down in July, which pushed oil and gas prices up again. The ONS said sharp rises in petrol and diesel prices were the main reason inflation rose in August.

Will inflation keep rising?

According to the Daily Express, economists predict inflation will keep rising over the coming months as the conflict in the Middle East pushes up the cost of living. The report did not include an official forecast figure.

Who is getting the blame?

The Conservatives blame Labour's tax rises, including higher National Insurance for employers, and its drive towards net zero energy. Unite points instead at energy companies and banks making large profits. The British Retail Consortium says business rates are a major cost for shops.