Rising inflation fuels rate-hike fears in UK

British inflation and borrowing rose more than expected last month, according to data that will add to calls for help for households in finance minister John Healey's first budget next week and the likelihood of a Bank of England interest rate hike. Consumer price inflation rose to 3.5 percent after a 3.1 percent increase in August, the Office for National Statistics (ONS) said on Wednesday. Economists polled by Reuters had forecast a rise of 3.4 percent in the 12 months to September as the surge in energy prices caused by the Iran war gathered steam. The Bank of England had predicted a smaller rise to 3 percent in forecasts it published in July. Last month's increase, which the ONS said was due to higher petrol and diesel costs, took inflation to its highest since October 2025. The September inflation rate is traditionally used by the government to set increases for welfare benefits. Separate figures showed the government borrowed more than forecast and public debt surpassed £3 trillion (US$4.01 trillion), fuelled by higher debt costs which are linked to inflation and underlining the constraints facing Healey. He is expected to offer some further support for households hit hardest by the jump in energy prices, but his options...