Inflation creeps up once again

Inflation went up once again in August for the second month in a row. 

Figures from the Office for National Statistics (ONS) show that inflation rose from 2.9% to 3.1% in the year to August 2026.

Analysts had been predicting an increase, but nevertheless, it’s a blow for hard-pressed families ahead of the autumn and winter months.

What is inflation?

Inflation is a measure of how fast prices are going up.

So if the figure increases, your money won’t stretch as far in the shops.

But lower inflation doesn’t mean the reverse.

Instead, it means prices are still going up, just at a slightly slower rate.

The ONS tracks inflation by looking at the prices of items in an imaginary shopping basket each month and working out how much the total price has changed.

Rising fuel prices a key factor

This latest increase in inflation is partly down to higher fuel costs, as the conflict in Iran continues to disrupt oil supplies and push up prices.

In fact, figures from the RAC show that a litre of petrol now costs an average of 170.54p, while diesel has gone up to 192.86p.

They’re the highest prices at the pumps in more than four years.

“Unfortunately for hard-pressed drivers, prices look set to keep on rising due to the cost of a barrel of oil consistently trading over the $100 mark,” said RAC head of policy Simon Williams.

Of course, factors like rising oil prices are beyond our control, but thankfully, there are practical steps you can take to lower the cost of driving.

Making small changes to how you drive, maintain your vehicle and buy fuel can add up to significant savings, so we've put together a list of 50 ways to cut your fuel costs to help you get started.

What does this mean for interest rates?

The Bank of England can put up interest rates to keep inflation under control and close to its target of 2% - and that can encourage people to save rather than spend or borrow.

But this latest increase in inflation doesn’t necessarily mean it will raise rates in its next meeting tomorrow (17 September).

In fact, many analysts and experts are predicting that interest rates will remain on hold at 3.75% given the uncertain economic backdrop.

What to do if you're struggling with day-to-day costs

If you want to cut costs at home, there are options worth exploring.

Get on top of your household budget

Take a close look at your income and outgoings, so you can see exactly what you’re earning and where everything is going.

You’ll then be able to prioritise essential expenses and work out where you can save money, perhaps by cancelling unused subscriptions.

We’ve put together a guide to how to create a budget to help you get started. 

Look at what benefits you could claim 

You might be entitled to some financial support to help you cover day-to-day expenses, even if you’re in work.

Give us a ring and we can check for you, or use our free benefits calculator to see what support you could get.

It might be more than you realise.

Ask for debt advice

If you’re dealing with debts that you’re struggling to pay off, contact us for confidential, practical and impartial debt advice.

Check our money saving ideas

Keep checking back here for our regular tips on how to cut costs at home, such as:

• Seven ways to make the Christmas food shop cheaper
• How to save energy
• Shop prices are rising: here’s how you can keep your bill down
• How to make your money go further

You’ll also get round-ups of standout deals and low-cost recipes that can help you save money.