UK inflation unchanged in August
By Abigail Townsend
Date: Wednesday 17 Sep 2025
(Sharecast News) - Inflation remained unchanged in August, official data showed on Wednesday, underpinned by higher food prices.
According to the Office for National Statistics, the consumer prices index was 3.8% in the 12 months to August, unchanged on July and in line with expectations. On a monthly basis, CPI rose by 0.3%, also in line with consensus.
However, the core inflation rate - which strips out the more volatile elements of energy, food, alcohol and tobacco - softened to 3.6% from 3.8%.
Grant Fitzner, chief economist at the ONS, said different price movements had offset each other during the month.
He continued: "The cost of airfares was the main downward driver, with prices rising less than a year ago following the large increase in July, linked to the timing of the summer holidays.
"This was offset by a rise in prices at the pump and the cost of hotel accommodation falling less than this time last year.
"Food price inflation climbed for the fifth consecutive month, with small increases seen across a range of vegetables, cheese and fish items."
Food prices soared 5.1% in August, up from 4.9% in July. It was the highest recorded rate since January 2024, although it is well below the peak seen in early 2023.
Including housing costs, inflation rose by 4.1% in the 12 months to August, down from 4.2% a month previously. Month-on-month CPIH rose 0.3%.
The Bank of England meets on Thursday to discuss interest rates. Already expected to leave the cost of borrowing unchanged, at 4%, today's data will likely strengthen that case.
The rate-setting Monetary Policy Committee is battling a loosening jobs market and sluggish economic growth alongside sticky inflation.
The BoE's long-term inflation target is 2%.
Matt Swannell, chief economic advisor to the EY Item Club, said: "September's outturn will likely mark the peak for CPI inflation. After that, the headline rate is expected to drift downwards gradually; further ahead, the upward pressures on food prices should start to fade around the turn of the year.
"It looks increasingly likely that the MPC won't see the disinflationary signals it needs to cut interest rates again this year, but we do think that he committee still favours further eventual rate cuts."
Russ Mould, investment director at AJ Bell, said: "Sticky inflation in the UK strengthens the argument for the BoE to sit on its hands tomorrow and leave rates unchanged.
"Markets aren't expecting a cut at this meeting, nor the one in November. We could feasibly get a cut in December if the labour market cools and the rate of inflation eases back, but equally, the BoE is never one to move quickly and rate might not fall below 4% until 2026 is in full flow."
ING said: "We aren't in the camp that thinks rate cuts are over. Services inflation should show more visible progress next spring, while wage growth should ease below 4% by year-end.
"Add in the fact that the late-November Budget is likely to be dominated by tax rises, and we think there's still a decent case for UK interest rates to fall two or three more times by next summer."
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