EconomyUK edition
UK interest rate vs inflation: 3.75% rate, 3.5% CPI, autumn 2026
UK consumer price inflation rose to 3.5% in September 2026, up from 2.6% in June, while the Bank of England's policy rate stayed at 3.75% at every month-end from July to October. Inflation has climbed each month on the 12-month measure, so it has drawn close to an interest rate that has not moved.
- Jul 20263.75%
- Aug 20263.75%
- Sept 20263.75%
- Oct 20263.75%
The policy rate did not move from July to October
The Bank of England's policy rate was the same at the end of July, August, September and October 2026. The October reading is the most recent, and it matches the summer ones exactly. Over the same months, the price figures changed a good deal. F1F2F3F4
Inflation has risen in every release since June
Consumer price inflation was 2.6% in June, 2.9% in July and 3.1% in August, then rose to the September figure given above. Each figure compares prices with the same month a year earlier. None of them is a change from the previous month, so the climb means the yearly pace got faster, not that prices jumped by these amounts within a single month. F5F6F7F8
CPIH, which adds owner occupiers' housing costs, showed a 12-month rise of 3.6% in September. It is built differently from CPI, so the two should be read side by side rather than as one measure beating the other. C63
The gap between the rate and inflation has nearly closed
In July, the policy rate sat well above the 2.9% inflation rate. By September, inflation had risen to just below a rate that had stayed where it was. The two figures measure different things: one is the rate the central bank sets, read at month-end, the other a 12-month change in consumer prices. Even so, comparing them is the usual way to judge how far interest rates are above or below the pace of price rises. F1F3F6F8
Prices are rising faster while the policy rate stands still
For people in the UK, the main change this summer was in prices, not in the policy rate. The yearly pace of inflation sped up from June to September while the rate held steady. These figures track the Bank of England's own rate only. They do not show what any lender charges on a mortgage or pays on savings. F4F5F8
Average weekly earnings grew by 3.7% in the three months to August compared with a year earlier. That is a three-month average, and it covers a different period from the September CPI figure, so the data cannot say exactly how pay and prices compare for that month. The unemployment rate was 4.7% in July on a seasonally adjusted basis. C70C69
October inflation is not yet in the figures
Inflation data run only to September, while the policy rate runs to October. It is not yet known whether inflation in October rose above the rate or fell back. Price data are available for single items such as fuel, gas and rent, but the facts do not include how much each one counts in the overall index. They therefore cannot show which items caused the rise. F4F8C66C67C68
AI analyst view
Leaning up low confidence next two CPI releases (October and November 2026)
Estimate range: 3.4–3.9%
Why
- Momentum is clearly upward. The 12-month rate has risen in each of the last three releases, and turning points in inflation rarely arrive without a month or two of levelling off first. F5 F6 F7 F8
- Energy is the likely source of pressure. Motor fuel prices were up 29.8% and gas 9.8% on a year earlier in September, and rises in energy prices usually feed into transport and other costs with a delay of several months. C66 C67
- Pay growth of 3.7% on a three-month average basis, with unemployment at 4.7%, suggests the labour market is not putting much downward pressure on service prices in the near term. C70 C69
What would change this view
- If October CPI falls back below August's 3.1%
- If the policy rate at a coming month-end is no longer 3.75%, which would change the balance between rates and prices
- If earnings growth slows clearly from 3.7% in the next release
This is the AI’s own interpretation of the official figures above, not an official forecast. It may turn out wrong.
Scenarios to watch
- Scenario, not a forecast If the October CPI figure shows the yearly pace still speeding up, inflation would move above the policy rate for the first time in this run of data.
- Scenario, not a forecast If October inflation comes in lower than August's 3.1%, the gap between the rate and price growth would widen again, and the summer rise would look more like a temporary jump.
What to check next
- The October 2026 CPI and CPIH release, to see whether inflation has passed the policy rate
- The Bank of England policy rate at the end of November 2026
- The next average weekly earnings figures, for the three months to September
- Unemployment figures for the months after July 2026
Verified data used in this report
| Indicator | Value | Period | Sources | Accessed | |
|---|---|---|---|---|---|
| F1 | UK · Central bank policy rate | 3.75% | Jul 2026 | Bank of England | |
| F2 | UK · Central bank policy rate | 3.75% | Aug 2026 | Bank of England | |
| F3 | UK · Central bank policy rate | 3.75% | Sept 2026 | Bank of England | |
| F4 | UK · Central bank policy rate | 3.75% | Oct 2026 | Bank of England | |
| F5 | UK · Consumer price inflation | 2.6% | Jun 2026 | Office for National Statistics (UK) | |
| F6 | UK · Consumer price inflation | 2.9% | Jul 2026 | Office for National Statistics (UK) | |
| F7 | UK · Consumer price inflation | 3.1% | Aug 2026 | Office for National Statistics (UK) | |
| F8 | UK · Consumer price inflation | 3.5% | Sept 2026 | Office for National Statistics (UK) | |
| C63 | UK · Housing cost inflation | 3.6% | Sept 2026 | Office for National Statistics (UK) | |
| C66 | UK · Fuel price inflation | 29.8% | Sept 2026 | Office for National Statistics (UK) | |
| C67 | UK · Gas price inflation | 9.8% | Sept 2026 | Office for National Statistics (UK) | |
| C68 | UK · Rent inflation | 4.2% | Sept 2026 | Office for National Statistics (UK) | |
| C69 | UK · Unemployment rate | 4.7% | Jul 2026 | Office for National Statistics (UK) | |
| C70 | UK · Wage growth | 3.7% | Aug 2026 | Office for National Statistics (UK) |
Other background figures (14)
| Indicator | Value | Period | Sources | Accessed | |
|---|---|---|---|---|---|
| C55 | UK · GDP growth | 1.39% | 2025 | World Bank | |
| C56 | UK · House prices | 3% | Q2 2026 | OECD | |
| C57 | UK · Unemployment rate | 4.75% | 2025 | World Bank | |
| C58 | UK · Fertility rate | 1.55 | 2024 | World Bank | |
| C59 | UK · Share of population aged 65+ | 19.7% | 2025 | World Bank | |
| C60 | UK · Population growth | 0.3% | 2025 | World Bank | |
| C64 | UK · Electricity price inflation | 3% | Sept 2026 | Office for National Statistics (UK) | |
| C65 | UK · Food price inflation | 1.3% | Sept 2026 | Office for National Statistics (UK) | |
| R88 | United Kingdom position among OECD member countries by house price growth over 12 months, counted from the lowest (1 = lowest in the OECD) | 10 | Q2 2026 | OECD | |
| R89 | number of OECD member countries with house price growth over 12 months data for this period | 31 | Q2 2026 | OECD | |
| R90 | United Kingdom house price growth over 12 months, OECD comparison measure (OECD nominal house price index, 12-month change; can differ from the national release) | 3% | Q2 2026 | OECD | |
| R214 | United Kingdom position among OECD member countries by total fertility rate (births per woman), counted from the highest (1 = highest in the OECD) | 8 | 2024 | World Bank | |
| R215 | number of OECD member countries with total fertility rate (births per woman) data for this period | 38 | 2024 | World Bank | |
| R216 | United Kingdom total fertility rate (births per woman), OECD comparison measure (World Bank, total fertility rate; can differ from the national release) | 1.55 | 2024 | World Bank |
Sources
How this report was checked
- Data: the newest reference period cited is Q2 2026.
- Figures were collected from the source on
- Written by an AI model (claude-opus-5-5) using only the official figures listed in this report.
- Automatic checks passed: every number matches a cited figure, every paragraph names its evidence, and there is no investment advice or copied source text.
- A separate quality-check model raised concerns, and the report was rewritten once to address them.
- No person reviewed this report before publication. Automatic checks confirm the numbers, not every interpretation.
Update history
- 2026-11-04 13:03 UTC — created
- 2026-11-04 13:03 UTC — approved+published
This analysis was written by AI from official statistics and passed automated checks. Last checked: 2026-11-04