The Bank Holds Rates at 3.75% - but a Third of the Committee Wanted a Rise
The Bank of England's Monetary Policy Committee held Bank Rate at 3.75% on 17 September, the level it has now sat at through every meeting since the spring. The vote was not unanimous: the Committee split 6 to 3, with three of the nine members preferring an immediate rise to 4%. That is a hawkish hold, not a comfortable one.
The reason is energy. The Bank said it still expects inflation to rise later this year, to around 4% by early 2027, because high and volatile energy prices from the conflict in the Middle East are feeding through to fuel and bills. Governor Andrew Bailey warned that policy "may have to tighten" if that pressure persists and starts to push up other prices. In plain terms, the door to a rate rise is open, and what keeps it open is the same thing that moved the inflation figures below.
Source: Bank of England - Monetary Policy Summary, September 2026 | Related: Real Cost of Living tool
Inflation Rose to 3.1% in August, and Almost All of It Is at the Petrol Pump
CPI rose by 3.1% in the year to August, up from 2.9% in July and the second monthly rise in a row. The driver is motor fuel: the average petrol price reached 161.3p a litre, the highest since November 2022, and fuel prices were up 23.0% over the year, from 15.5% the month before. That jump is partly a base effect, because fuel was falling a year ago, which flatters the annual figure.
It is worth being honest about who this hits. The headline 3.1% is the average basket, and this rise is concentrated, not broad. Core inflation, which strips out energy and food, did not move at all and stayed at 2.6%, and services inflation was also unchanged at 3.4%. If you drive a lot, this is a real, at-the-pump price rise; if you do not own a car, you feel far less of it.
Source: ONS - Consumer price inflation, August 2026 | Related: Why your cost of living can differ from headline inflation
Pay Is Still Ahead of Prices, Just - and This Figure Feeds the Triple Lock
Average earnings grew 3.5% for regular pay and 3.9% for total pay in the three months to July. After inflation, that is 0.6% and 0.9% in real terms, so pay is a little ahead of prices rather than racing away from them.
The 3.9% total-pay figure matters beyond payslips, because it is the earnings input the State Pension triple lock uses. The other input, September's inflation number, is published on 21 October, so the April 2027 uprating is not settled yet. Whichever is higher of earnings growth, inflation or the triple lock's fixed minimum sets the April increase.
Source: ONS - Average weekly earnings, September 2026 | Related: State Pension Top-up Calculator
The Government Wants to Merge Your Forgotten Small Pension Pots
The Department for Work and Pensions opened a consultation on 15 September, "Small Pots: a pathway for consolidation", which runs nine weeks to 17 November. The plan is that a deferred pension pot worth £1,000 or less, left untouched for at least 12 months, would be moved automatically into one of a small number of authorised consolidator schemes. You would keep the right to opt out or pick a different scheme.
The scale is the point. GOV.UK says there are over 13 million such deferred pots worth under £1,000, together worth more than £4 billion, growing by about a million a year and costing roughly £240 million a year to administer - a cost that savers ultimately carry. The power comes from the Pension Schemes Act 2026, and the aim is to have consolidation working from 2030.
Key Dates
1 October 2026 - the new energy price cap period starts and the electricity VAT zero rate begins.
5 October 2026 - deadline to register for Self Assessment for first-time 2025/26 filers.
21 October 2026 - September inflation is published, the triple lock's inflation input.
28 October 2026 - the Autumn Budget.
17 November 2026 - the small pots consultation closes.