PwC comments on ONS CPI data - October 2026

Commenting on the latest Office of National Statistics Consumer Price Index September 2026 data, Adam Deasy, Economist at PwC UK, says:

“Inflation is climbing again, but the heat is still coming largely from abroad rather than at home. September’s rise to 3.5% primarily reflects another step up in energy costs, with more still to come: wholesale energy and refined product prices are still climbing, pointing to a potentially 20%+ increase in the Ofgem energy price cap in January. 

“Food prices have been one area of softness, partly thanks to market competition and customer resistance to price increases, but this relief may also be living on borrowed time. Higher energy costs, weaker harvests, and a strengthening El Niño mean that food could become a more visible source of inflation over the coming months. 

“The Bank of England is well aware that higher imported energy prices are not something interest rates can directly fix, and it is likely that evidence for the embedding of inflation currently remains limited. But inflation moving closer to 4% makes it harder to simply look through the shock; the higher and longer inflation stays elevated, the greater the risk that it starts to influence wage and price-setting behaviour and the riskier it becomes to continue to wait for definitive evidence of those ‘second-round’ effects. 

“With the Budget upcoming, it is worth a reminder that this is also a particularly unhelpful kind of inflation for the Chancellor. Imported energy inflation raises household bills, benefit uprating and debt-interest costs, without providing the same boost to wages and the tax base as domestically generated inflation. That leaves both households and the public finance headroom under more pressure.”