# UK inflation jumps to 3.1% as Middle East crisis bites > Rising oil prices and Middle East tensions push UK inflation higher, threatening interest rate hikes and tax increases at next month's Budget. - Title: UK inflation jumps to 3.1% as Middle East crisis bites - Summary: Rising oil prices and Middle East tensions push UK inflation higher, threatening interest rate hikes and tax increases at next month's Budget. UK inflation… - Keywords: uk inflation, cpi, middle east crisis, oil prices, brent crude, interest rates, bank of england, john healey, andy burnham, budget, energy bills, petrol prices - Source: Dailymail — https://dailymail.com/news/article-16135173/Inflation-rises-3-1-fears-worse-come-Middle-East-energy-meltdown-Brits-face-threat-rate-hikes-tax-Budget.html?ito=1490&ns_campaign=1490&ns_mchannel=rss - Published: 2026-09-16T06:03:50+00:00 - Read time: 2 min - Topics: uk inflation, cpi, middle east crisis, oil prices, brent crude, interest rates, bank of england, john healey, andy burnham, budget, energy bills, petrol prices ## Inflation climbs to 3.1% UK inflation rose to 3.1% in August from 2.9% in July. The increase matched economist predictions but signals the start of a worrying trend. ## Oil hits $108 a barrel Brent Crude reached $108 per barrel this morning. The surge is driven by deepening Middle East crisis and threatens further price increases. ## Diesel at four-year high Drivers are already feeling the pinch at the pumps. Diesel prices have climbed to their highest level in four years. ## Energy bills could jump 25% Estimates suggest household energy bills could rise by a quarter in January. The increase would add significant pressure to family budgets. ## Inflation may hit 4% next year Some analysts now predict CPI will reach 4% in 2027. Markets are pricing in multiple interest rate increases to combat rising prices. ## Bank decision due tomorrow The Monetary Policy Committee will announce its latest rate decision tomorrow. Most expect the Bank to hold fire this time despite inflation pressures. ## Gas prices climbing since July Gas prices have been ticking higher since the US-Iran ceasefire deal collapsed on July 8. The breakdown has destabilized energy markets. ## Petrol and diesel drive inflation Sharp price rises for petrol and diesel pushed inflation up in August. Higher airfares, particularly for long-haul journeys, also contributed. > Sharp price rises for petrol and diesel pushed inflation up again in August. ## Factory costs rising too Rising crude oil and petrol prices increased both the cost of raw materials and the price of goods leaving factories. The impact ripples through the economy. ## Government struggling with Budget Ministers are struggling to find ways of balancing the books at next month's Budget. Tax increases and spending cuts are both on the table. ## Healey blames Middle East war John Healey said the Middle East war is impacting inflation worldwide. He pointed to effects on bills, weekly shopping and petrol pumps. > The war in the Middle East is impacting on inflation worldwide, not just here at home. ## Government offers limited relief The government has cut tax on electricity bills, capped bus fares at £2 and lowered rates for pubs and live music venues. But relief measures remain modest. ## Jobs market shows weakness Numbers on company payrolls fell by 26,000 last month. Payrolls are now down 145,000 over the past year. ## Job vacancies at five-year low Vacancies tumbled to a fresh five-year low in the three months to August. Around 8,000 fewer jobs were advertised compared to the same period in 2025. ## Wages barely beat inflation Private sector regular wage growth was 2.9%, barely keeping ahead of inflation. Workers are seeing minimal real-terms pay increases. ## Economy shows resilience despite crisis Despite serious global uncertainty, Healey said the UK economy is proving resilient. The government maintains its determination to deliver growth in every postcode. ## Key takeaway UK inflation rose to 3.1% in August and could hit 4% next year as oil prices surge to $108 per barrel amid Middle East turmoil.