UK inflation hits 3.5%, borrowing £24.5bn: what it means for the pound rate in Pakistan

UK inflation rose to 3.5% in September from 3.1% in August, its highest in almost a year, and government borrowing for the month came in at £24.5 billion, the Office for National Statistics said on Wednesday. Both numbers land a week before the Budget on 28 October and two weeks before a Bank of England meeting at which markets now expect an interest rate rise.

For the millions of Pakistanis with family, savings or fees in Britain, the figure to watch is the pound. The pound rate in Pakistan stood at Rs 369.98 on 21 October on our GBP to PKR page, up from Rs 368.63 a day earlier.

Fuel drove the jump

Petrol and diesel did most of the work. Transport inflation rose to 6.6% from 4.6%, and motor fuel prices were up 29.8% on a year earlier, MoneyWeek reported from the ONS release. Diesel prices rose at their fastest rate since July 2022. "Increased fuel prices were again the main driver," said Grant Fitzner, the ONS chief economist.

The RAC puts the average UK litre of petrol at 174p and diesel at 199p. At today's rate that is about Rs 644 and Rs 736 a litre, against Rs 382.02 for petrol at PSO's ex-depot Karachi price on our petrol price page.

Other key numbers, as reported by Euronews:

• Core inflation, which strips out energy and food, rose to 2.8% from 2.6%.
• Services inflation was 3.7%; food inflation held at 1.3%.
• Prices rose 0.4% in the month.

Borrowing above forecast

Public sector net borrowing of £24.5 billion in September was £1.8 billion more than a year earlier and above what markets expected. Borrowing from April to September reached £97.8 billion, £6 billion more than the Office for Budget Responsibility forecast. Net debt passed £3 trillion for the first time, although it fell slightly as a share of the economy, to 94% of GDP.

The overshoot leaves the government less room in next Wednesday's Budget.

Rate rise expected on 5 November

The Bank of England's base rate is 3.75%, well above its 2% inflation target. The Bank expects inflation to average 3.75% in the last quarter of 2026 and about 4% early next year. Danni Hewson of AJ Bell said market expectations of a November increase were "nearing 100%". It would be the Bank's first rate rise since 2023.

What it means for you in Pakistan

• Sending money home: a firmer pound means more rupees for each pound sent. Check the live rate and compare with our currency converter before you transfer.
• UK university fees and living costs: students and parents paying in pounds face higher UK prices, and every rupee rise in the pound adds to the bill.
• Visiting the UK: fuel, travel and airfares are where prices have risen fastest.

The pound's next move will depend on the Budget on 28 October and the Bank's decision on 5 November.