Inflation in the UK is low

The annual UK inflation rate remained steady at 3.8 percent in September 2025, unchanged from the previous two months and below expectations of 4 percent. Transport prices increased by 3.8 percent (versus 2.4 percent in August), driven primarily by higher costs for motor fuels and airfare, and to a lesser extent, vehicle maintenance and repair. Prices also accelerated in restaurants and hotels (3.9 percent versus 3.8 percent) and clothing and footwear (0.5 percent versus 0.2 percent). Conversely, inflation slowed in entertainment and culture, mostly live music events (3.2 percent versus 2.7 percent), and in food and non-alcoholic drinks (5.1 percent versus 4.5 percent), the first slowdown since March and partly reflecting a greater increase in sales and discounting activity in September 2025 compared to the same month the previous year. Price growth also slowed slightly in housing and utilities (7.4 percent versus 7.3 percent). Services inflation remained unchanged at 4.7 percent. Monthly CPI inflation remained unchanged. Annual core inflation unexpectedly fell to 3.5 percent from 3.6 percent.