Market news
UK inflation rose to 3.1% today, one day before the Bank of England decides
The Office for National Statistics reported this morning that CPI inflation rose to 3.1% in the year to August 2026, up from 2.9% in July, a day before the Bank of England's Monetary Policy Committee announces its next rate decision.
What happened
ONS data published today shows the Consumer Prices Index rose 3.1% in the 12 months to August 2026, up from 2.9% in July. CPIH, which includes owner-occupiers' housing costs, rose 3.3%, up from 3.1%. The ONS said transport, particularly motor fuels, made the largest upward contribution to the change. Petrol rose 9.1 pence per litre over the year to 161.3 pence, against a 0.3 pence rise over the same period last year. Diesel rose 14.2 pence per litre to 181.8 pence. Motor fuel prices overall were up 23.0% annually, against 15.5% in July.
This follows a week in which roughly 25 lenders raised fixed mortgage rates, pushing the average two-year fix to a five-month high of 5.67%.
Why it matters one day before the Bank decides
The Bank of England's Monetary Policy Committee meets tomorrow, 17 September, and announces its decision at midday. It held Bank Rate at 3.75% at its last meeting on 30 July, on a 6-3 vote, with three members wanting to raise it to 4.00%. A higher-than-expected inflation print the day before a decision strengthens the argument those three members were making. It doesn't force the Committee's hand on its own, but it removes one of the reasons a majority might have had for cutting, and it feeds directly into the swap rate market that fixed mortgage pricing already tracks.
What it costs, worked through
Inflation itself doesn't touch a mortgage payment. Bank Rate does, for anyone on a tracker or their lender's standard variable rate. Take a £200,000 repayment mortgage with 20 years left, on a tracker at Bank Rate plus 0.75%, currently 4.50%. The monthly payment is about £1,265. If the Bank raises rates by a quarter point at a future meeting, taking the tracker rate to 4.75%, the same mortgage costs about £1,293 a month, an extra £28 a month or roughly £336 a year. Tomorrow's decision is expected to be a hold, so nothing changes immediately; the risk this data adds is to what happens at the Bank's next meeting, in November.
What Thursday's decision won't undo
Today's inflation figure was published ahead of tomorrow's MPC meeting, so it's already factored into whatever the Committee decides. It doesn't reverse the fixed-rate rises of the past two weeks, which are priced off swap rates and gilt yields that move independently of the Bank's own rate. A hold tomorrow keeps tracker and SVR payments where they are; it says nothing about where new fixed-rate pricing goes next.
What to do if you're on a tracker or your lender's SVR
If you're on a fixed deal, none of this changes your payment; it's locked until that fix ends. If you're on a tracker mortgage or you've drifted onto your lender's standard variable rate, your payment already moves with Bank Rate, so a rise at a future MPC meeting would reach you directly and quickly. Worth checking what a fixed deal would cost you now, so you're comparing an actual number rather than guessing at where rates go next.
Frequently asked questions
Does today's inflation figure change my mortgage payment?
Not directly. Inflation itself doesn't set your rate. If you're on a fixed deal, nothing changes until that fix ends. If you're on a tracker or your lender's standard variable rate, your payment only moves when the Bank of England actually changes Bank Rate, which happens at MPC meetings, not on the day inflation data is published.
Will the Bank of England raise rates tomorrow because of this?
A single inflation reading rarely changes a decision the day before a meeting; the nine-member Committee will already have been weighing the data in the run-up. It does strengthen the case made by the three members who voted to raise rates in July, which makes a future rise somewhat more likely than it looked a month ago, even if tomorrow itself is a hold.
Why did inflation rise specifically because of fuel prices?
Petrol and diesel prices rose sharply over the past year, with motor fuel inflation reaching 23.0%, up from 15.5% in July. The ONS attributed this to transport costs making the largest upward contribution to the headline figure, tracing back to wider volatility in energy markets.
Track your renewal date automatically
Set up your free mortgage timeline and we'll tell you when it's worth locking in a new rate, based on when your current deal actually ends.
Examples are illustrative and rounded. Your own mortgage offer and lender confirm your actual figures and dates. This is information, not financial advice. For advice on your circumstances, speak to a mortgage adviser regulated by the FCA.