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.

Image source, Getty Images

Inflation is the increase in the price of something over time.

For example, if a bottle of milk costs £1 but is £1.10 a year later, then annual milk inflation is 10%.

If it had risen to £1.05 instead, then the inflation rate would be lower, at 5%. That would still have been an increase, but a smaller one.

When we say the inflation rate has fallen, that often means prices are still rising, just not as quickly.

The prices of hundreds of everyday items and services, including food and fuel, are tracked by the Office for National Statistics (ONS) to produce the Consumer Prices Index (CPI), with the latest figure published monthly.

The recent rise in inflation has mainly been driven by higher fuel prices, which have dramatically increased since the outbreak of the Iran conflict.

After the US and Israel attacked Iran and its proxies in February, Iran threatened shipping travelling through the Strait of Hormuz, driving up oil transportation costs, including maritime insurance.

Image source, Reuters

The latest set of inflation figures are set to be released at 07:00 BST.

Economists predict the rate could rise today, mostly due to the rise in global fuel prices.

In the year to August, inflation hit 3.1%. Those numbers, released last month, were an increase on the 2.9% in the year to July.

The new inflation figure comes ahead of Andy Burnham's first Budget as prime minister, which will be delivered by Chancellor John Healey on 28 October.

Stick with us, we'll bring you the figure as soon as it's announced, along with reaction and analysis from our experts.