UK inflation remained a major concern as it remained high at 3.8% for the year ending in September 2025. Surprisingly, this figure is in line with inflation rates for July and August of 2023. The Consumer Prices Index (CPI) is the UK’s dominant inflation measure. Most recently, it indicates that inflation has been highly volatile but is still very much above the Bank of England’s target of 2%.
The high inflation in the UK endures largely because of the lingering effects of the Covid-19 pandemic. Meanwhile, the demand for oil and gas expanded at markedly rapid rates during this period. On top of this, geopolitical tensions from Russia’s invasion of Ukraine resulted in enormous increases in energy prices. A confluence of issues led to the dire 11.1% inflation rate in October 2022. That was the most extreme level in 40 years.
Inflation plummeted to 1.7% in September 2024 — a dramatic turnaround. Since then, it has recovered and now hovers comfortably above the Bank of England’s 2% target. To combat tightening economic conditions and high inflation expectations, the Bank of England increased monetary policy restrictiveness by raising interest rates. They hit a high watermark of 5.25%, a rate last experienced in 2007. Starting in August 2024, the central bank began cutting interest rates, reducing them five times to reach a current rate of 4%.
The core CPI, which leaves out more volatile components such as food and energy, was 3.5% on a yearly basis through September 2025. This is a small drop from 3.6% in August. That allows us to get a better picture of what’s going on with inflation. Overall, inflation remains high, but perhaps some underlying pressures are starting to relax.
Food prices have been a major driver of persistent inflation fears. Food and non-alcoholic beverage inflation exploded to 4.5% in September alone. At the same time, overall food price inflation continued to rise, marking the fifth month in a row of increases, up to 5.1% in August. These numbers underscore how difficult it is for consumers to buy common, necessary products.
Internationally, inflation rates have begun to settle down as well. In September, US inflation rose to 3%, up from 2.9% in August. Likewise, fellow eurozone countries like Germany, France and Spain all recorded 2.2% inflation—up from 2% in August. These recent developments are part of a major global trend toward inflation reaccelerating across virtually all the world’s major economies.
UK inflation is steady at 3.8% – economists point out to the future. The lack of change reflects both an accomplishment in the battle against exorbitant prices and a recognition that plenty of work remains. The Bank of England raises interest rates to keep inflation under control. Just as importantly, it spurs economic development.