What the UK’s job numbers and inflation will mean for the Bank of England’s interest rate decision this week
New inflation and jobs numbers this week will mean the Bank of England’s Monetary Policy Committee (MPC) will have plenty of data to dissect when it meets on Thursday (18 September).
There were few surprises in Tuesday’s ONS figures, which show a continued cooling of the UK labour market alongside pay growth that’s gradually easing but still running too hot for the Bank of England’s liking.
Payrolled employment declined for a seventh successive month in August, though last month’s decline of 8,000 workers was relatively modest.
Annual growth in average earnings excluding bonuses dipped from 5% to 4.8% in the three months to July, but remains well above the 3% level generally regarded as consistent with the Bank’s 2% inflation target.
“There’s little in the data that is likely to shift the Monetary Policy Committee’s thinking ahead of Thursday’s interest rates decision, where policy is widely expected to remain on hold,” said Jack Kennedy of Indeed Hiring Lab.
“The Bank remains stuck between weak demand and persistent inflation pressures, meaning any rate cuts may be off the table until 2026 unless the labour market begins to show a more material deterioration.”
Inflation remains steady
Data published by the ONS on Wednesday (17 September) shows the Consumer Price Index (CPI) rose by 3.8% in the 12 months to August 2025, unchanged from July 2025, data published by the Office for National Statistics shows.
On a monthly basis, CPI rose by 0.3% in August 2025, the same rate as in August 2024.
Notably, food prices continue to rise across the UK. The 12-month inflation rate for food and non-alcoholic beverages was 5.1% in August 2025, up from 4.9% in July.
This was the fifth consecutive increase in the annual rate and the highest recorded since January 2024, but it remains well below the peak seen in early 2023.
“Inflation remained elevated in August, consistent with the Bank of England’s projections. Higher food and energy prices, alongside the passthrough from increased labour costs, are expected to keep price growth firm in the near term,” said Martin Sartorius (Principal Economist at the CBI).
“The Monetary Policy Committee looks set to keep interest rates unchanged tomorrow and, going forward, the MPC faces a delicate balance between signs of a cooling labour market and the risk of price pressures remaining stubbornly high.
“Its rate decision in November will likely hinge on whether future data give the MPC confidence that a further cut will not contribute to inflation staying elevated for longer,” he said.
