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7h ago

UK Inflation Holds at 3.8% in September, Defying Forecasts of a Rise

The softer-than-expected print cools expectations for a November Bank of England rate cut.

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)
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People shop at a grocery store in Toronto, Ontario, Canada November 22, 2022. REUTERS/Carlos Osorio
Drone view of the financial district in London, Britain July 3, 2022. REUTERS/Yann Tessier

Overview

  • The ONS confirmed CPI at 3.8% for a third consecutive month, below the roughly 4% economists had predicted.
  • Core inflation eased to 3.5% and services inflation held at 4.7%, with petrol and airfares pushing up prices as food and recreation costs offset.
  • Financial markets raised the probability of no policy move in November, with only limited rate cuts priced by year-end from the current 4% Bank rate.
  • September’s CPI sets the baseline for upratings, with the state pension expected to rise by 4.8% under the triple lock and many benefits and rail fares linked to 3.8%.
  • Forecasters are divided on the path ahead, with some expecting declines helped by lower energy and fuel costs as the IMF warns UK inflation will remain high versus G7 peers.