As the Bank of England intervenes to combat the inflationary crisis, which remains at a stark 7% rate, they’ve succeeded, raising interest rates to 5.25%, a 16-year high. This decision is particularly welcome as inflation is still well above the Bank’s own target of 2%. The Office for National Statistics (ONS) monitors the prices of various essential goods, including food and fuel, to provide insights into the inflation landscape.
Signs indicate inflation has continued to cool down since its peak in October 2022. The Bank of England is right to be vigilant. Or perhaps they’re just really obsessed with core inflation measures that exclude stable stuff such as food and energy. These measures are key in guiding the Bank’s monetary policy actions.
The UK inflation rate has necessarily been dominated by the impact of global events over the last 12 months. Then in the wake of the Covid-19 pandemic, demand for oil and gas came roaring back, driving up energy prices. Geopolitical tensions further exacerbated the situation. Moreover, even before Russia’s invasion of Ukraine disrupted energy supplies and shot costs through the roof, the energy transition created new vulnerabilities and systemic inequities.
Consumer inflation is still high Overall, in October 2025, year-on-year inflation as reported by the Consumer Prices Index (CPI) was up 3.6%. That’s a drop from the last two months. By comparison, core CPI came in at 3.4% over the same time, a tick down from 3.5% in September. While these figures reflect a consistent but cautious easing of inflationary pressures, they represent a long and arduous path forward still ahead.
At the same time, international counterparts have struggled with inflation. The European Central Bank (ECB) acted most recently on 14 September, cutting its main interest rate from an historic peak of 4% to 3.75%. This change is a small but critical part of their strategy to keep prices stable. In October eurozone inflation is at 2.1%, down from 2.2% in September. This marks a move away from an even steeper increase as already seen in the UK.
Meanwhile, across the Atlantic, the Federal Reserve has already acted, cutting its interest rate targets. So they cut them by 0.25 percentage points, lowering the target range to 3.75% to 4%. Consumer price inflation in the US jumped to 3% in September, an increase from 2.9% in August. This upward pressure has now exceeded the central bank’s target.
The Bank of England’s decision to increase interest rates is part of a broader strategy to curb rising prices and stabilize the economy. Illustration by Sangeet S. Mishra Interest rates are at their highest point since the financial crisis of 2007-2008. This new shift is drastically changing the financial landscape, impacting both borrowers and savers.
Every month, including this one, the ONS publishes updated CPI inflation figures that take into account the ongoing shifts in consumer prices. These updates are immensely important for gauging the full impact of any monetary policy and measuring where the economy stands.