Inflation Jumps to 3.1% on the War's Petrol — a Five-Month High
The war reached the price index: inflation rose to 3.1% in August from 2.9%, a five-month high driven overwhelmingly by motor fuel as the conflict chokes up to a fifth of global oil and gas supply. Core inflation held at 2.6%; the breach above 3% triggers the Governor’s explanatory letter to the Chancellor. The Prime Minister called it “a concern” and promised “difficult decisions” at the Budget; Capital Economics’ verdict: “Everyone knows that bigger rises in inflation are on their way.”
The decomposition is the story: core steady while headline climbs means the shock is still arriving from outside — imported, petrol-shaped, not yet bred into wages and services — which is simultaneously the case for the Bank’s patience and the countdown on it, since every month at the pump gives the second round another payday to take root. The Bank’s own staff see the peak above 4% in the new year: an open-letter era beginning, with each letter a public accounting of why the target is missed and what patience is for. Politically the number lands where inflation always lands — on the government of the day, whatever the causal chain through Hormuz. Watch services inflation in the next two prints; 3.4% holding is tolerable, 3.4% rising ends the hold.