UK core inflation rises to 2.8% in September, matching forecasts

UK core consumer prices rose 2.8% in the year to September, up from 2.6% in August and in line with forecasts. Headline inflation rose to 3.5%, above the 3.4% expected and up from 3.1% the previous month.

The figures follow a jump in producer input prices, which rose 8.3% in the year to September, well above the 7.6% forecast and up from 6.1%. They also follow labour market data showing unemployment fell to 4.7% in August, with employment up 102,000 against a forecast of 5,000, even as wage growth slowed to 3.7% in the three months to August from 3.9%.

Bank of England officials, including Dave Ramsden and Andrew Bailey, have been building the case since late September that inflation pressure is proving persistent rather than temporary. Rate-setter Megan Greene has said inflation expectations remain anchored but above historical norms. Today's core print, landing exactly on consensus rather than surprising, does not change that view, and it leaves the path of four to five further rate rises through 2027 intact without forcing any change of pace.

The sharper pressure point remains the long end of the gilt market, where 30-year yields are sitting near levels last seen in 1998. An inflation reading that matched expectations does nothing to ease that strain. For US markets, this remains a domestic UK policy story, with no direct read-through for the Federal Reserve.