UK inflation’s rise from 2.9% in July to 3.1% in August has put renewed pressure on household budgets just as the government prepares its Budget and the Bank of England weighs its next move. The central dispute is not over whether fuel costs have jumped, but whether the increase is chiefly an imported shock or evidence of wider policy failures.

The Office for National Statistics’ explanation centres on transport costs. Its chief economist, Grant Fitzner, said: “Sharp price rises for petrol and diesel pushed inflation up again in August. Higher airfares, particularly for long-haul journeys, also contributed to the increase.”¹ Petrol averaged 161.3p a litre in August, its highest recorded level since November 2022, while diesel averaged 181.8p.¹

The government argues those figures reflect upheaval beyond Britain’s borders, after oil and gas prices rose following the collapse of the US-Iran ceasefire deal in July. Chancellor John Healey said the Middle East war was affecting inflation “worldwide, not just here at home,” from bills and food shops to petrol pumps.¹ He pointed to electricity-bill tax cuts, the £2 bus-fare cap and lower business rates for some venues as measures intended to provide relief.¹

Right-leaning critics cast the same inflation reading differently. Shadow chancellor Andrew Griffith said “every family is paying the price for Labour’s choices,” arguing that jobs taxes, employment rules and energy policy were feeding through to consumer costs.² Rupert Lowe likewise framed inflation as an everyday loss of spending power, writing that it “makes ordinary people poorer.”Rupert Lowe MP (RupertLowe10)³

Liz Truss raised a separate challenge to the monetary response, claiming the Bank of England’s planned halt to quantitative tightening would allow inflation to rise while easing pressure from government debt.Liz Truss (trussliz)⁴ The Bank’s 2% inflation target leaves the prospect of higher borrowing costs central to the argument: ministers emphasise external causes and mitigation, while critics say the domestic policy response will determine how long the squeeze lasts.