Image source, Getty Images

The UK inflation rate was 3.5% in the year to September, driven by soaring petrol and diesel prices.

This latest 3.5% figure was slightly higher than economists expected, and marks the third successive increase in inflation rate.

Office for National Statistics (ONS) chief economist Grant Fitzner said fuel prices were the main driver, with diesel at its highest price since July 2022, but that the rising price of airfares, computer games and live events also contributed.

"The annual cost of both raw materials and goods leaving factories continued to rise, driven by higher crude oil and petrol prices, respectively," Fitzner added.

As well as prices rising faster than expected in the year to September, the UK government also borrowed more than it had anticipated.

Reacting to the figures, Chancellor John Healey says "conflicts in the Middle East and Europe" were to blame for rising prices, adding that his Budget next week will give families and businesses "breathing space".

While Conservative the shadow chancellor says the figures show Labour has "lost control" of the economy and must take "urgent action" to tackle the deficit in the upcoming budget.

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As well as prices rising faster than expected in the year to September, the UK government also borrowed more than it had anticipated.

Office for National Statistics (ONS) data shows the government spent £24.5bn more than it took in taxes in September - the highest figure this year and slightly more than the £22.8bn borrowed in September last year.

Government borrowing for for this financial year remains lower than than at the same point last year, but still slightly higher that forecasts from the Office for Budget Responsibility.

Following September's borrowing, the ONS says national debt is estimated to have exceeded £3 trillion for the first time. However, as a proportion of the economy, debt was lower than a year earlier.

Kevin Peachey
Cost of living correspondent

Even though the inflation rate is on the rise, the majority of savings accounts available on the market are still offering an inflation-beating return.

Just over one in four savings accounts lag behind inflation, according to financial information service Moneyfacts, while more than 1,600 deals offer a return that's better than inflation.

Caitlyn Eastell, personal finance analyst at Moneyfacts, says savers should not be complacent, but should shop around for the best rates.

"Watching a savings balance creep up can offer reassurance, but if the interest earned fails to keep pace with inflation, that money is effectively losing spending power," she says.

Michael Race
Business and economics reporter

Julie, 66, says she is scared of how high her energy bills could be over winter amid soaring prices and the rising cost of her weekly shop.

"Every time I go shopping there seems to be an increase," she tells me.

"The price of petrol is certainly making things difficult, can't go out as often," says Julie, who is retired but volunteers and does cleaning.

She says things have been "just about manageable" to date, but there is concerns heading into the winter, especially with energy prices: "It's scary how much they are going to be."

Asked what she would like to see in the Budget next week, she says: "I haven't really thought about it to be honest, because none of it makes any difference."

Kevin Peachey
Cost of living correspondent

The rise in the state pension in April is still based on the triple lock, despite the prime minister's announcement that the he wants to adjust the system in future.

We now have the data for all three elements of the triple lock - inflation, wages and 2.5%.

The increase in average wages has proved to be the highest of the trio, rising at 3.9%, so the government is expected to confirm 3.9% as the rise in the state pension in April. That means:

• the flat-rate state pension - for those who reached state pension age after April 2016 – will likely be £250.70 a week, or £13,036.40 a year. That would be an increase of £488
• the old basic state pension - for those who reached state pension age before April 2016 – will likely be £192.10 a week, or £9,989.20 a year, an increase of £374.40

The majority of pensioners also receive other income, often from private or workplace pensions.

Do you know what has gone up more in price? Take our quiz below.

What does today's news mean for interest rates?published at 08:33 BST

08:33 BST

Kevin Peachey
Cost of living correspondent

Analysts say the latest inflation figures increase the chances of an interest rate rise by policymakers at the Bank of England when they next meet.

Remember, the Bank rate - the benchmark for borrowing costs faced by individuals and businesses - stands at 3.75%.

Members of the Bank's Monetary Policy Committee will be looking closely at the core inflation rate and services inflation rate, both of which saw a rise. That suggests not all of the pressure on prices is the result of international factors.

The next interest rate decision will be announced on 5 November.

Image source, Reuters

Healey likely to have little spare cash ahead of next week's Budgetpublished at 08:14 BST

08:14 BST

Dharshini David
Deputy economics editor

Inflation is not just a challenge for households, but the chancellor too - and he got a sharp reminder of that as he prepares next week’s Budget.

Other figures released today show that the government spent £24.5bn more than it took in last month.

Higher inflation has meant that the Treasury receiving more tax, as prices and salaries rise - but that has been outpaced by the amount the government is spending on higher public sector wages and in particular, debt interest repayments.

In the first half of the financial year, since April, the government has borrowed £6bn more than expected.

Such pressures mean Healey is likely to have little extra spare cash to provide the "breathing space" for households and businesses he has promised in the Budget, without resorting to tax rises.

Image source, PA Media

Image source, PA Media

Conservative shadow chancellor Andrew Griffith says Labour have "lost control of the economy".

His comments come following the latest inflation figure, which shows that prices in the UK rose 3.5% in the 12 months to September, slightly higher than economists' expectations.

In a statement, Griffith says Labour must take "urgent action" to tackle the deficit in next week's budget, while also reducing red tape and net zero costs he says are "driving up the cost of living".

He adds that the Conservatives would "cut the welfare bill and cut wasteful spending so we can cut taxes and make our country prosperous again".

Kevin Peachey
Cost of living correspondent

The rate of inflation in September is used as the benchmark for the rise in benefits the following April.

So, anyone on various benefits may now expect a rise of 3.5% in what they receive from next spring, as the cost of living continues to squeeze family finances.

Attendance allowance, carer’s allowance, disability living allowance, incapacity benefit, industrial injuries benefit, personal independence payments, severe disablement allowance, additional state pension and guardian’s allowance all rise - by law - in line with CPI.

The rest - including Universal Credit - depend on the decisions made by the government, particularly the chancellor at next week's Budget.

The inflation rate is the amount by which things are getting more expensive - when it is high, it means the cost of living is high and food, travel, household bills and clothes are more expensive.

The inflation rate can also affect interest rates, as the Bank of England uses interest rates as a tool to try to control inflation.

Raising rates is meant to discourage borrowing and spending and encourage saving. The idea is that when spending falls, price rises slow down, bringing down the inflation rate.

Interest rates affect mortgage, credit card and savings rates for millions of people.

Image source, Getty Images

Kevin Peachey
Cost of living correspondent

Borrowing figures have also been published - in a busy morning for economic data fans - showing that the government borrowed more than expected again in September.

The ONS figures show that government spending, including higher debt interest costs, increased more than government income, partly reflecting the impacts of inflation.

Government debt also surpassed £3 trillion for the first time. However, as a proportion of the economy, debt was lower than a year earlier.

Kevin Peachey
Cost of living correspondent

Image source, EPA/Shutterstock

Statisticians at the Office for National Statistics (ONS) pointed to transport costs as the key - but not only - factor in the increasing rate of rising prices.

Diesel prices rose by 10.7p per litre in September, compared with a fall of 0.4p per litre in September last year. Rising costs of airfares and sea fares were also a factor.

Also on an upward trend were live music ticket prices and computer game downloads - much to the disappointment of many parents, no doubt, although prices here can be volatile.

Limiting the rate of the overall rise were the cost of going to restaurants and the price of hotels, which both rose slower than a year earlier.

Image source, Reuters

Chancellor John Healey says that price rises caused by conflicts in the Middle East and Europe are hitting Britain and other countries across the world.

Responding to the rise in the inflation rate this morning he says: "Today we’ve given the green light to getting North Sea gas from the Jackdaw field, investing the revenues in our clean energy future and supporting British workers.

“In my Budget next week, I will keep up this momentum. Maintaining our fiscal discipline and drive for growth in every postcode, while giving businesses and families some breathing space."

ONS chief economist Grant Fitzner says that inflation "climbed notably" in September to its highest annual rate in almost a year.

He says that increased fuel prices were the main driver with the cost of diesel at its highest since July 2022.

"Other upward pressures included airfares and, to a lesser extent, computer games and live events, which are often volatile," he says.

"These were partially offset by the cost of hotel stays, where prices rose by less than this time last year.

"The annual cost of both raw materials and goods leaving factories continued to rise, driven by higher crude oil and petrol prices, respectively."

Kevin Peachey
Cost of living correspondent

Image source, Getty Images

The inflation rate of 3.5% for September was slightly higher than analysts' expectations.

It will be of no surprise to drivers that motor fuel was a key influence on the faster rate of price rises.

This figure is influential, as it is the one used to guide the annual increase in a whole host of working age benefits in April.

The rate of inflation rose to 3.5% in the year to September, according to the latest figures just released by the Office for National Statistics (ONS).

This follows the 3.1% figure announced for the year to August, and marks the third successive increase.

We'll bring you more in our next post.

Michael Race
Business and economics reporter

Image source, PA Media

You only have to fill up your car or van at the petrol station to experience first hand that monthly budgets are being hit hard.

The average price for a litre of unleaded in the UK is currently about £1.74 while diesel is more expensive at £1.99, marginally down on the all-time high of £2 it reached earlier this month.

This is why the latest inflation figure, which is a measure of consumer prices rising over time, is expected to rise.

Global oil prices have been spiking because of the US-Iran war disrupting global trade and creating supply fears.

As well as directly affecting the cost of fuel, elevated oil prices can lead to prices edging upwards across a host of goods - including food - as companies pass on the higher expenses they face to consumers.

More often than not goods are transported by lorry or van, so the price of fuel can have far reaching consequences.

Image source, EPA/Shutterstock

Today's inflation figure for September comes just one week before Andy Burnham's first Budget as PM, which will be delivered by Chancellor John Healey on 28 October.

This week, Healey dismissed calls from some Labour MPs to increase Capital Gains Tax when he makes his speech to the Commons next week.

The chancellor's options for raising money at the Budget are limited, as Labour's 2024 manifesto pledged not to increase income tax, National Insurance and VAT, the three big revenue raisers.

The government is also restricted in how much it can borrow due to its self-imposed rules on debt.

Last month's inflation rate for the year to August was 3.1%, according to the last set of Office for National Statistics figures. Increasing petrol prices, diesel prices and airfares contributed to price growth.

It meant that inflation moved further away from the Bank of England's 2% target after it accelerated from 2.9% in July.