# UK Inflation Hits Nearly a Year-High as Iran War Drives Up Fuel Costs

> UK inflation rose to 3.5% in September as motor fuel prices surged 30% amid Iran war disruptions to the Strait of Hormuz, putting the Bank of England on track to raise rates to 4% in November.

- Source: Foreign Time
- Canonical URL: https://foreigntime.com/article/uk-inflation-rises-iran-war-fuel-costs-bank-of-england
- Author: Foreign Time Newsroom
- Section: Trade
- Published: 2026-10-22T10:12:57.000Z
- Updated: 2026-10-22T10:12:57.000Z
- Tags: UK inflation, Bank of England, Iran war, fuel prices, John Healey

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UK inflation climbed to 3.5% in the year to September, up from 3.1% in August and above economists' forecast of 3.4%, according to figures the Office for National Statistics released Wednesday. It's the highest reading in nearly a year, and the main driver was unmistakable: motor fuel prices jumped 30% year-over-year in September, up sharply from a 23% annual rise the month before, as fallout from the war in Iran squeezed global oil and gas supplies through disruptions in the Strait of Hormuz. Transport costs ended up the single largest contributor to the month's inflation figure.

The jump pushes inflation further above the Bank of England's 2% target just as rate-setters were already signaling they were close to acting. The Bank's benchmark rate currently sits at 3.75%, well below the 15-year peak of 5.25% hit earlier in the tightening cycle, and economists now widely expect policymakers to raise it to 4% at their November 5 meeting. Suren Thiru, chief economist at the ICAEW, said the latest inflation data has left conditions favorable for exactly that kind of move.

## Government promises 'breathing space'

The political fallout landed quickly. Speaking as the figures came out, UK Treasury chief John Healey said the government is aiming to give households and businesses "some breathing space" in an upcoming budget statement, an acknowledgment that a fresh rate hike layered on top of rising fuel costs would add more pressure on consumers already dealing with a cost-of-living squeeze. The remarks came as Healey addressed the Labour Party's annual conference, where the government has been trying to show it has a plan to cushion households from exactly this kind of external shock.

## An imported shock, not a domestic one

What makes the inflation jump politically awkward for the government is its source: unlike wage-driven or demand-driven inflation, this spike traces directly back to a geopolitical conflict thousands of miles away. The Strait of Hormuz, through which a large share of the world's seaborne oil trade passes, has become a flashpoint as the Iran war disrupts shipping and supply, pushing up fuel costs for importers like the UK regardless of domestic economic conditions. That leaves the Bank of England weighing a rate increase largely to contain a price shock it has no direct ability to prevent at the source, while the Treasury looks for ways to soften the impact on households until the external pressure eases.

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Originally published by Foreign Time. Free to cite with attribution and a link to https://foreigntime.com/article/uk-inflation-rises-iran-war-fuel-costs-bank-of-england.