The most recent data indicates that rate of inflation UK has begun to level out. It holds firm at 3.8% for one year out — end of September 2025. This is consistent with the high rates we began to experience in July and August of this year. It tells us that inflationary pressures remain robust, despite some past declines. The Bank of England’s key interest rate stands at 2% as of June 2025, a strategic measure aimed at controlling inflation, which remains above the central bank’s target of 2%.
The Consumer Prices Index (CPI) is the official measure of UK inflation. It underscores the inflationary costs linked to deeply unsustainable, harmful consumer goods and services. The Office for National Statistics (ONS) does an admirable job of closely tracking these expenses. The Core CPI, which excludes the most volatile food and energy items, posted an even lower number of 3.5% for the same period. As a result, this sustained decline points to an easing in underlying inflation pressures, albeit slowly.
Inflation in euro-using countries was just 2.2% in September 2025. This disparity highlights the acute structural challenges that the UK economy continues to face in reining inflationary expectations. It needs to do more than just address the economic headwinds.
Though this may seem like an obvious strategy now, the current inflation situation has deep roots in actions taken back in 2022. That October, inflation shoots up to a high of 11.1%. That increase was mostly due to the elevated demand for oil and gas following the Covid-19 pandemic. Global geopolitical tensions in the wake of Russia’s invasion of Ukraine also led to a dramatic increase in energy prices. Together, all of these factors made up a perfect storm, resulting in massive price hikes throughout multiple industries.
Despite the considerable decline from late 2022, where inflation levels reached their highest in decades, prices continue to rise, albeit at a slower pace. This constant upward trend led the Bank of England to act urgently and decisively. In reaction to persistent previous inflationary pressures, it increased interest rates to 5.25%, a 16-year high, in the process. The purpose was to cool down demand and get prices back under control, preferably within the Fed’s tolerable range.
Inflation patterns among other developed economies show a much different path. In September 2025, US inflation ticked up to 3% from 2.9% in August. This increase reflects what we know to be the inflationary crisis that is challenging communities across the world, including here in the UK. Meanwhile, the European Central Bank (ECB) took measures to stimulate its economy by reducing its main interest rate from 4% to 3.75% in June 2024, reflecting a different approach to managing inflation.
The ONS is very proactive in its approach to tracking the price movement of a wide range of everyday items. This even includes critical commodities such as food and fuel. Notably, recent updates to the inflation basket have included virtual reality headsets and yoga mats, reflecting changing consumer habits and preferences in an evolving market. On the other hand, local newspaper ads were excluded from this basket, representing a decline in how consumers seek out information in legacy media.
The persistence of inflation at this level raises questions about the effectiveness of monetary policy and its ability to adapt to shifting economic conditions. Economists and policymakers alike are eager to see what unfolds. They are rightly struggling to find the right balance between growth and stability, and put inflationary pressures back in the bottle.