Surging fuel prices push UK inflation rate to 3.5% ahead of Budget

With a week to go until he delivers the Budget, Healey said: “We know that price rises from conflicts in the Middle East and Europe are hitting Britain and countries worldwide.”

He said the International Monetary Fund last week had praised the UK government for its “fiscal discipline”, and that the government has just given the go-ahead for getting more gas from the North Sea’s Jackdaw field.

The Budget on 28 October will “keep up this momentum”, he said, by sticking to the government’s self-imposed fiscal rules, and by driving “growth in every postcode, while giving businesses and families some breathing space”.

But the figures came as the ONS said the government borrowed £25bn in September, £1.8bn higher than a year earlier, as higher inflation helped to push up debt interest costs.

The Conservatives said higher inflation and borrowing showed Labour had “lost control of the economy”.

Shadow Chancellor Andrew Griffith called for Healey to use his Budget to “tackle the deficit, and reduce the red tape and net zero costs that are driving up the cost of living for families”.

He added that the Conservatives would cut taxes, the costs of benefits and “wasteful” spending to “make our country prosperous again”.

Ruth Gregory, deputy chief UK economist at Capital Economics, said the borrowing figures “painted a dismal picture” ahead of Healey’s Budget. She said the amount borrowed in September was higher than analyst expectations as well as spending watchdog the Office for Budget Responsibility (OBR)’s forecast.

“This reinforces our view that the Chancellor will deliver a cautious Budget on 28 October that has little net impact on the economy and leaves the toughest fiscal choices for next year,” she said.