UK inflation comes in lower than expected
The Consumer Prices Index (CPI) rose by 3.8% in the 12 months to September 2025, unchanged from August, new data from the ONS shows. Monthly, CPI was unchanged in September 2025, as it was in September 2024.
This is above the 2% target range set by the Central Bank, but is below the expected 4% increase which was forecast. While the drop will be welcomed, the Bank of England is only expected to begin cutting interest rates again sometime next year.
Transport made the largest upward contribution to the monthly change in both CPIH and CPI annual rates; recreation and culture, and food and non-alcoholic beverages made the largest offsetting downward contributions.
The 12-month inflation rate for food and non-alcoholic beverages was 4.5% in September 2025, down from 5.1% in August. This was the first time since March 2025 that the annual rate has slowed.
Monthly, food and non-alcoholic beverages prices fell by 0.2% in September 2025, compared with a rise of 0.4% a year ago. This was the first time since May 2024 that prices have fallen month-on-month.
“A variety of price movements meant inflation was unchanged overall in September. The largest upward drivers came from petrol prices and airfares, where the fall in prices eased in comparison to last year,” said ONS Chief Economist Grant Fitzner.
“These were offset by lower prices for a range of recreational and cultural purchases, including live events. The cost of food and non-alcoholic drinks also fell for the first time since May last year.”
