As the United Kingdom still wrestles with high inflation, which has been above the Bank of England’s target for some time now, …Along with this, the inflation rate was at an astounding 3.6% in October 2025. That’s a huge decline from its high point of 9.1 percent in October 2022. As inflation soared, the Bank of England responded with dramatic measures. They began increasing the federal funds rate to 5.25% – their highest level in 16 years. Since then, though, core inflation has climbed back up to 3.4%. This jump reveals the persistent worries that are influencing the Bank’s monetary policy decision making.
And there’s no denying the Office for National Statistics (ONS) has nailed tracking inflation to a T. It tracks changes to the prices of hundreds of common items, with an emphasis on goods people absolutely need—including food and fuel. This data is what underpins the calculations for the Consumer Prices Index (CPI). The CPI has been the government’s principal measure of inflation in the UK for over a decade. With the Bank of England mandated to target an inflation rate of 2%. More recently, it has worked to bring true inflation down in practice nearer to this target.
While the impacts of inflation continue to be an obstacle, we have seen a significant drop from its peak. Last October we saw inflation rise far above the 2% target—enough for the Bank of England to step in and act boldly. The subsequent increase in interest rates, dubbed “Inflation Fight 2.0” by some, was aimed at slowing down consumer demand and bringing down inflation. The road to realizing that almost universally praised target inflation rate has turned out to be no easy path.
In a macroeconomic sense, global inflation trends make things more difficult. In September 2025, the United States was experiencing an inflation rate of 3%, up from 2.9% in August. In retaliation, the Federal Reserve dropped its major discount rate down to a range of 3.75% to 4% last month. In June 2024, the European Central Bank (ECB) cut its deposit interest rate from that historical high of 4% to 3.75%. By June 2025, the ECB’s key rate had dropped even further to 2%. These global changes can affect the UK’s economic conditions, making these international developments incredibly important for the UK’s monetary policies.
Current UK inflation rate as of October 2025 is at 3.6% (Core inflation at 3.4%). Although these numbers suggest spending has fallen from pandemic-era peaks, they are still well over the Bank of England’s target. Our analysis of the latest ONS data illustrates that consumers are experiencing highly disparate price pressures across sectors. This makes the politics of controlling broad-based inflation that much trickier.
These hikes, analysts argue, are necessary for the Bank of England to effectively respond to rising inflation. They caution that it could take years for these measures to realize their complete effect. Yet interest rates and even consumer prices don’t react immediately. We know that external factors can significantly shape how consumers move in the market and impact the competitive landscape.