ISSUE NO. 59 · MONDAY 26 OCTOBER 2026

Inflation at 3.5% and heading for 4%, retail sales down 0.4%, and capital gains tax taken off the table

Inflation reached 3.5% in September, its highest in almost a year, and the Bank is already braced for 4%. Fuel did most of it — but core prices firmed too, and that is the part that does not pass.

Every number last week pointed the same way. Shoppers bought less than anyone had pencilled in, confidence fell at its fastest since 2016, and the Chancellor spent the week ruling things out. Capital gains tax is safe; the banks are not.

Below: the decision the data has nearly made, the shoppers who stopped first, the tax that came off the table, eight numbers, the week ahead and one calculator — then everything else from the week.

Lead

Diesel is dearer than at any point since July 2022, and that is what carried September past what the City expected.

The rise from 3.1% was led by fuel, with Brent crude back around $110 a barrel as the oil shock from the Iran war reaches the pump and the weekly shop. Grant Fitzner, the ONS chief economist, put the climb down to fuel again, with airfares adding to it. What matters more sits underneath: core inflation rose to 2.8% from 2.6%, which is pressure spreading rather than one commodity moving. Forecasters expect Bank Rate to go from 3.75% to 4% in November, a week after the Budget. Read the full story →

The Numbers

Eight numbers. Inflation is the one that moved, the index gave back ground on Friday, and the debt ratio has turned up again.

More News

City economists pencilled in a 0.1% dip for September; shoppers delivered four times that.

Volumes fell 0.4% against the 0.1% drop forecasters expected, and August was revised up to 0.7% from 0.5%, which makes the turn sharper rather than softer. Non-food stores, online retailers and supermarkets all sold fewer goods. Retailers reported lower footfall and customers holding back on anything they could put off. Fuel was the only major sector to grow, and that is price rather than appetite: diesel hit a record £2.01 a litre in early October. GfK’s confidence index fell 11 points to -24, its steepest drop since 2016. Read the full story →

Healey has told his own Cabinet no on capital gains tax, which leaves the banks holding the bill.

Louise Haigh and Wes Streeting were among the ministers pressing the Treasury to lift the higher rate from 24%, with basic-rate payers on 18%. Healey turned them down on the view that a rise would push more high earners out of the country, and the Treasury had already refused to bring the two into line with income tax at 20% and 40%. Still live is the banking surcharge, cut from 8% to 3% in 2023; putting it back would raise about £2bn a year and breaks no manifesto promise. Read the full story →

The Brief

Everything else published last week, newest first.

• Healey Red Tape Drive Targets a 25% Cut by 2030 — A quarter off compliance by 2030.
• London Startup Fund Targets a Gap Banks Won’t Fill — Capital for firms banks will not take.
• Boohoo Profit Target of £100m Is the Next Test — A profit target with a deadline.
• Consumer Confidence Slump Will Shape Healey’s Budget — The BRC index at -40.
• LSEG Octus Deal Will Push It Deeper Into Fixed Income — £2.6bn for credit-risk data.
• Bad Loan Provisions Are the Banks’ Next Big Headache — £4bn set aside for 2027.
• Amazon Youth Promise Will Start Young Hires on £31,000 — £31,000 to start, no degree.
• Flutter Job Cuts of Up to 1,400 Blamed on Gambling Tax — Up to 1,400 jobs, blamed on tax.
• The Interest on UK National Debt Should Worry Everyone — £10.9bn of interest in one month.
• Jackdaw Gas Field Will Start Supplying UK This Winter — First gas this winter.
• Falling UK Vacancies Could Stall a November Rate Hike — 691,000 vacancies, and a reason to wait.
• French Bonds Sink While UK Gilts Hold Their Nerve — The French spread widest since 2012.
• Family Business Tax Change Could Almost Double the Bill — A handover taxed at 45%, not 24%.
• The Budget Is the Next Test for UK Profit Warnings — Sixty-five warnings, Budget still ahead.
• Pension Inheritance Tax Pulls In 10,500 New Estates — 10,500 estates will owe what they never did.
• Nscale Data Centre Loses Microsoft Ahead of Its IPO — Microsoft walks before the float.
• Rising Mortgage Rates Will Squeeze Prices Into Year End — Higher fixes, a soft autumn market.

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The Week Ahead

• Wednesday — Healey’s first Budget. Everything above was written in its shadow.
• Thursday, 9.30am GMT — Business demography, Q3. Firms started and stopped, in the run-up.
• Friday, 9.30am GMT — UK National Accounts, the Blue Book. The annual revision can rewrite recent growth.
• Thursday 5 November — the Bank’s rate decision. The first chance to act on September.

The Toolbox

One calculator from the site each week, chosen to fit what has just happened. Free, no sign-up, and it shows every step of the sum.

BOE Rate Impact Calculator

“If the Bank goes to 4% in November, this works out what that does to the payment leaving your account, in pounds.”

The Close

Two of last week’s stories are the same argument from opposite ends. Shoppers stopped buying because things cost more; the Chancellor is being asked to make things cost less, on Wednesday, without the room to do it. The Bank meets the week after and may pull the other way. Watch which of the two blinks first.

If something here is wrong, or there is something you want dug into, just reply. It comes straight to me.

MJB