Inflation is rising. What does it mean for your money?

Ever feel like your weekly shop costs more every time you go? Or that filling up the car takes a bigger bite out of your bank balance than it used to?

You’re not imagining it.

UK inflation rose to 3.5% in the 12 months to September, up from 3.1% in August. In other words, prices are going up, and some things are getting more expensive faster than others.

So, what’s behind the rise? And is there anything you can do about it?

What’s pushing prices up?

Fuel costs were the biggest driver of September’s rise. Over the 12 months to September, fuel prices increased by 29.8%.

Conflict in the Middle East has pushed up oil prices, making it more expensive to fill up. Between August and September alone, the average price of petrol rose by 8.2p per litre to 169.5p. Diesel went up by 10.7p to 192.5p per litre.

Air fares and live events also helped push inflation up.

Of course, you don’t need a set of statistics to tell you when things are getting pricier. You notice it when you’re doing the food shop, paying your bills or trying to work out where your money went this month.

Inflation, explained

Inflation is the rate at which prices rise over time.

Say your favourite Friday night takeaway cost £35 last year and now costs £38.50. That’s a 10% price increase.

The official inflation rate measures price changes across a whole range of things, from food and transport to household bills and entertainment. The figure you’ll normally see in the news is the Consumer Prices Index (CPI), which tracks how the cost of everyday goods and services changes over time.

And when inflation falls, prices don’t necessarily fall with it. It usually means they’re rising more slowly, so your shopping bill might not get any smaller.

Inflation affects everyone differently. If more of your money goes on essentials like fuel, food and energy, rising prices in those areas could hit your budget harder than the headline figure suggests.

What does inflation mean for the State Pension?

If you’re retired or getting closer to retirement, there’s some good news. The State Pension is expected to rise by 3.9% from April 2027.

That’s because of the triple lock, which increases the State Pension each year by whichever is highest: inflation as measured by the CPI in the previous September, average earnings growth taken from May–July 2026, or 2.5%. With wages growing by 3.9% and inflation at 3.5%, earnings growth is expected to set next year’s increase.

If you receive the full new State Pension, your weekly payment could rise from £241.30 to £250.70, an extra £488 a year.

But the triple lock might be changing. Find out what the proposed changes could mean for your retirement in our article on the future of the State Pension triple lock.

You can also check your ⁠State Pension forecast on GOV.UK to see how much you could receive and when you can claim it.

What about interest rates?

Inflation and interest rates go hand in hand. The Bank of England aims to keep inflation at 2% CPI, using the base rate to help keep price rises under control.

When prices are rising quickly, the Bank of England may raise interest rates to help slow inflation down. If inflation starts to ease, it may cut them. But it also looks at what’s happening across the economy before deciding what to do.

If you have a mortgage: Your repayments might change if you have a tracker mortgage or when your fixed-rate deal ends. Many lenders let you lock in a new deal up to six months before your current one expires, so it’s worth checking your options early.

If you borrow money: Interest rates on credit cards, loans and other borrowing can affect how much you pay back. If you’ve not checked your rates in a while, it’s worth a look.

If you have savings: Higher interest rates can mean better returns, but savings accounts don’t all pay the same. A quick comparison could help you find a better rate.

Five ways to give your money a helping hand

You can’t decide what happens to inflation… if only, hey? But there are a few things you can do to make managing your money a little easier.

1. Give your spending a quick check

When prices creep up, the budget that worked six months ago might not quite add up anymore.

Take a look at your regular spending. Are there subscriptions you’ve forgotten about? Could you get a better deal on your broadband or phone? Are there any bills coming up that you could plan for now?

You don’t have to give up every little treat or track every penny. It’s about getting a clearer picture of where your money goes and spotting any easy wins.

2. Check what your savings are earning

If you’ve got money tucked away, when was the last time you checked the interest rate?

Some savings accounts pay much less than others, so you could be missing out on extra interest without realising it.

Have a look at what’s available and think about when you might need to access your money. An easy-access account can be handy for emergency savings, while other accounts may offer different rates in exchange for restrictions on withdrawals.

3. Get ahead of the big expenses

Car insurance. Christmas. The annual energy bill. That birthday that somehow comes around every year.

Some expenses are easier to manage when you see them coming.

If you can, work out roughly what they’ll cost and put a little aside each payday. Even small amounts can help spread the cost, rather than having everything land on your bank balance at once.

And if there’s no spare cash to put away right now, that’s okay. Knowing what’s coming up can still help you plan.

4. Know what your borrowing is costing you

Credit cards, overdrafts and loans can all be useful in the right circumstances. But it’s worth knowing what you’re paying to use them.

If you have a few different debts, write down the balances, interest rates and minimum payments. Seeing everything in one place can make it easier to work out your next step.

If you’re finding it harder to keep up with repayments, you’re not alone, and there’s no shame in asking for help. Organisations like StepChange offer free, confidential debt advice to help you understand your options and work out what to do next.

5. Make the most of the support available

You don’t have to be a money expert to get better at managing your finances. And you don’t have to wait until something goes wrong to ask for help.

There are plenty of free tools that can help you work out where you stand:

Want a clearer picture of your spending?
Try ⁠MoneyHelper’s budget planner to see what’s coming in, what’s going out and where you might be able to save.

Wondering if you’re missing out on financial support?
Use ⁠Turn2us’s benefits calculator to check what you could be entitled to. You might be eligible for help you didn’t know existed.

Struggling with energy costs?
⁠Ofgem has information about energy bills, available support and what to do if you’re having trouble paying.

If you’re employed, it’s also worth checking what financial wellbeing support your workplace offers. You might have access to financial education, help understanding your benefits or tools to help you build better money habits.

Knowing where to start can be half the battle, but these free tools can help you take that first step.

A little clarity goes a long way

There’s no magic trick to make everything cost less. We wish there was. But a little more understanding of your money can help you feel better prepared for whatever comes next.

And if money feels a bit tight right now, you’re not alone. Being good with money doesn’t mean having a perfect budget, saving every spare penny or getting everything right every month. Sometimes, just getting through the month is enough.

Whatever your finances look like today, you don’t have to figure everything out at once. Start where you are, take things one step at a time and remember that support is there if you need it.