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yesterday

UK Inflation Holds at 3.8% in September, Defying Forecasts

The lower-than-forecast print tempers bets on immediate rate cuts.

Britain's Chancellor of the Exchequer Rachel Reeves walks to the G20 meeting during the World Bank/IMF Annual Meetings at the International Monetary Fund (IMF) headquarters in Washington, Thursday, Oct. 16, 2025. (AP Photo/Jose Luis Magana)
Image
People shop at a grocery store in Toronto, Ontario, Canada November 22, 2022. REUTERS/Carlos Osorio
A drone view of the City of London, Britain's financial powerhouse, at daybreak in London, Britain June 19, 2025. REUTERS/Yann Tessier/File Photo

Overview

  • Core inflation eased to 3.5% and services inflation held at 4.7%, both slightly below expectations, according to the ONS.
  • Petrol and airfares were the biggest upward drivers, offset by falling food and recreational prices, including the first monthly drop in food and non-alcoholic drinks since May last year.
  • The reading is the third straight month at 3.8% and comes as the Bank of England considers its Nov. 6 decision, with economists saying a hold is likely even as some bring forward cut expectations.
  • September’s CPI sets key indexation: many benefits are now expected to rise by 3.8%, rail fare calculations use this figure, and the state pension is set to increase by 4.8% via the triple lock’s earnings component.
  • The outcome shapes Chancellor Rachel Reeves’s Nov. 26 budget planning, as forecasters including the IMF still see the UK running higher inflation than other G7 economies into 2026.