Current Inflation Rate UK – Latest ONS Figures and Trends

The UK’s Consumer Prices Index remained at 3.8% in the 12 months to August 2025, according to the latest data from the Office for National Statistics. The figure represents a standstill from July’s rate, with prices rising by 0.3% on a monthly basis. The Bank of England’s target sits at 2%, meaning inflation continues to run well above the desired threshold.

The reading marks a significant shift from the peaks seen in late 2022, when CPI briefly touched 11.1%. However, the persistent above-target inflation has continued to shape household budgets and monetary policy decisions alike. The August 2025 bulletin also revealed divergent movements across different sectors of the economy.

Services inflation, a key focus for the Bank of England’s policy deliberations, stood at 4.7% in August 2025, down from 5.0% the previous month. Meanwhile, goods inflation edged upward to 2.8%, reaching its highest level since October 2023. The mixed picture reflects ongoing complexities in the UK’s inflationary environment.

What is the current inflation rate in the UK?

Key insights on UK inflation

• The CPIH measure, which includes owner-occupier housing costs, stood at 4.1% annually in August 2025, slightly down from 4.2% in July.
• Core CPI, which excludes energy, food, alcohol, and tobacco, decreased to 3.6% from 3.8% previously.
• Services inflation at 4.7% continues to outpace goods inflation, reflecting persistent pressures in the labour-intensive sectors of the economy.
• Goods inflation rose to 2.8%, the highest reading since October 2023, suggesting supply-side pressures may be rekindling.
• Air fares contributed downward pressure, while restaurants, hotels, and motor fuels pushed prices upward during the period.
• Prices have accumulated by more than 20% over the three years leading into early 2026.

UK inflation snapshot

The Consumer Price Index reached 139.3 (2015=100) in August 2025, while the CPIH index stood at 138.9. The Owner-Occupier Housing index registered at 134.5 during the same period.

How is inflation measured in the UK?

The UK employs several measures to track inflation, each serving different purposes and audiences. The Consumer Prices Index has become the official target measure for monetary policy since the Bank of England was granted independence in 1998. It focuses specifically on a basket of consumer goods and services, excluding the costs associated with owning and occupying a home.

CPI, CPIH and RPI explained

The Consumer Prices Index captures price changes across approximately 700 goods and services consumed by households. The latest ONS bulletin provides detailed breakdowns of how these categories moved during the reporting period. The measure deliberately excludes owner-occupied housing costs, which the ONS considers investment rather than consumption.

CPIH extends the CPI by incorporating owner-occupier housing costs using a rental equivalence approach. This brings the measure closer to the broader Retail Prices Index, though CPIH uses a harmonised methodology aligned with European Union standards. The August 2025 reading of 4.1% for CPIH exceeded the CPI rate of 3.8%, reflecting the contribution of housing-related costs.

The Retail Prices Index represents a longer-established but now deprecated measure. It includes mortgage interest payments and uses a different formula that historically produces higher readings. While no longer the ONS’s preferred measure, RPI remains relevant for certain contractual arrangements and historical comparisons. The ONS publishes comprehensive monthly comparisons between CPIH, CPI, and RPI.

The Bank of England’s inflation target

The Bank of England’s Monetary Policy Committee operates under a symmetrical inflation target of 2%. This means the Bank aims to keep CPI close to 2% whether the rate sits above or below that figure. When inflation deviates significantly from target, the Committee must explain its approach in an open letter to the Chancellor.

The current above-target environment has complicated the rate-setting picture. Services inflation, which the Bank watches closely as an indicator of domestically-generated price pressures, remains elevated at 4.7%. Analysts have noted that elevated core and services pressures, combined with oil price volatility, continue to test expectations for further rate reductions.

What are the latest UK inflation trends and forecasts?

The trajectory of UK inflation over recent months reveals a complex picture of gradual disinflation punctuated by periodic reversals. From a peak of 11.1% in October 2022, the rate descended sharply before experiencing renewed upward pressure through late 2024 and into 2025. The latest data for February 2026 shows CPI at 3.0%, representing meaningful progress from the heights of the cost-of-living crisis.

Recent monthly movements

The monthly pattern from the latter half of 2024 illustrates the volatility that has characterised the inflation landscape. September 2024 saw modest upward movement with CPIH rising 0.1% and CPI unchanged from the prior month. October brought a sharper increase, with both measures advancing by 0.6%, pushing annual rates notably higher.

November 2024 continued the upward trend with CPIH increasing 0.2% and CPI rising 0.1%, cementing the move back toward higher readings as the year closed. This resurgence prompted renewed scrutiny from the Bank of England and complicated market expectations for interest rate adjustments in early 2025.

The path from peak to present

The UK experienced seven consecutive months of double-digit inflation between September 2022 and March 2023, driven primarily by the global energy crisis and its downstream effects on food and consumer goods. The energy price cap surged to £3,549 annually in October 2022, compared with £1,277 previously, creating enormous pressure on household budgets.

Subsequent months witnessed a gradual unwinding of these energy-related shocks as global markets stabilised and comparisons with year-earlier elevated prices began to flatter current readings. However, the disinflation process has proved slower and more uneven than initially anticipated, with services inflation proving particularly persistent.

What causes UK inflation and how does it impact the economy?

UK inflation derives from a combination of domestic and international factors that push prices upward across the economy. Understanding these drivers helps contextualise why inflation has remained elevated despite aggressive monetary policy tightening. The current above-target environment reflects structural features of the UK economy as much as temporary shocks.

Primary drivers of current inflation

Services inflation has emerged as the dominant factor sustaining elevated price growth in the UK economy. The August 2025 data shows services running at 4.7%, well above the headline CPI rate and goods inflation of 2.8%. This reflects persistent wage growth pressures in labour-intensive sectors, where businesses continue to pass on elevated staffing costs to consumers.

Historical data shows how energy prices drove the acute inflation spike of 2022. The energy price cap quadrupling within two years created cascading effects throughout the economy. More recently, communications costs have risen by 6.1% while transport and furniture have shown modest deflationary pressure, illustrating the heterogeneous nature of price movements across sectors.

Supply chain disruptions, labour market tightness, and the passthrough of previous sterling depreciation have all contributed at various stages. The combination of domestic services inflation alongside renewed goods price pressures suggests the inflationary process may be broadening beyond its initial energy-driven origins.

Impact on households and the economy

The human cost of sustained above-target inflation manifests most acutely among lower-income households. Research indicates that 56% of households reported experiencing rising costs in December 2024, up from 45% in July of the same year, though below the peaks seen during the acute crisis of 2022. Those with lower incomes face disproportionate exposure through housing costs and energy bills.

The inflation environment has direct implications for monetary policy and borrowing costs. Recent data showing persistent above-target readings has complicated the Bank of England’s rate decisions and contributed to fiscal pressures, with reports of borrowing over-runs. Market participants closely watch inflation releases as indicators of the future path of interest rates and gilt yields.

For consumers navigating the current environment, understanding inflation dynamics matters for financial planning. Those considering major purchases may find Houses for Sale Barnsley – Prices, Best Areas and Buyer Guide useful for contextualising property market conditions alongside broader economic pressures.

International context

UK inflation has followed a broadly similar trajectory to other advanced economies, reflecting shared exposure to global energy markets and post-pandemic supply disruptions. However, the UK’s particular circumstances, including its reliance on services employment and exposure to domestic energy markets, have produced some distinctive patterns in how inflation has evolved across different categories.

UK inflation rate timeline

1. October 2022: CPI peaks at 11.1%, the highest reading in over four decades.
2. September 2022 – March 2023: Seven consecutive months of double-digit inflation.
3. 2024: Inflation gradually falls, dropping below 2% on the CPI measure before rebounding through the latter months.
4. September 2024: CPI falls to 1.7%, the lowest recent reading.
5. March 2025: CPI reaches 2.6%, down from 2.8% previously.
6. August 2025: CPI holds steady at 3.8%, with mixed signals across goods and services.
7. February 2026: CPI records 3.0%, marking continued but gradual decline toward target.

The ONS publishes comprehensive historical data covering CPIH, CPI, and RPI going back multiple decades, enabling detailed analysis of longer-term trends and seasonal patterns.

Inflation data: what we know and what remains unclear

While the broad direction of travel toward lower inflation appears established, the precise path and timing remain subject to considerable uncertainty. Global commodity markets, domestic wage negotiations, and fiscal policy decisions will all influence whether the final leg of the journey to target proceeds smoothly or encounters further complications.

Economic context and analysis

The current inflation environment must be understood against the backdrop of the most severe cost-of-living crisis in a generation. The cumulative effect of sustained price increases has been substantial, with overall price levels having risen by more than 20% over the three years to early 2026. This represents a significant erosion of real living standards, particularly for those on fixed or modest incomes.

The persistence of services inflation reflects structural features of the UK labour market. High employment levels and continued demand for services have given workers greater bargaining power, enabling wages to grow at rates that sustain inflationary pressure even as goods prices moderate. The Bank of England has repeatedly emphasised services inflation as the key metric for assessing domestic price pressures.

Market participants and households alike have had to adapt to an environment of elevated uncertainty about future price movements. For those planning travel, whether for business or leisure, understanding how broader economic conditions influence costs can inform decision-making. Resources such as the Travel Insurance Compare the Market – 2025 Guide to Best Deals may prove valuable for managing one element of expenditure in uncertain times.

Expert perspectives and sources

The Bank of England targets 2% CPI inflation as its primary objective, operating under a symmetrical framework that treats deviations above and below target with equal concern.

— Bank of England Monetary Policy documentation

The Office for National Statistics serves as the primary official source for UK inflation data, publishing comprehensive monthly bulletins and detailed datasets. The Statista platform provides supplementary historical context alongside ONS figures, though users should verify which source they are referencing for specific data points.

Bank of England communications, including quarterly Inflation Reports and Monetary Policy Summary statements, provide the official interpretation of economic conditions and the outlook for inflation. These documents form the basis for understanding the Committee’s reaction function and likely policy trajectory.

Summary

UK inflation stands at 3.8% as measured by CPI in August 2025, representing a standstill from the previous month and continuing a gradual descent from the 11.1% peak reached in October 2022. The Bank of England’s target of 2% remains some distance away, with services inflation at 4.7% and goods inflation at 2.8% reflecting ongoing complexities in the disinflation process. The next official inflation release is scheduled for 22 April 2026, when fresh data will provide updated evidence on whether the final phase of the return to target is proceeding as anticipated.

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