The UK’s Consumer Prices Index inflation rate fell to 3.6 percent in October 2025, down from 3.8 percent in September. This represents the first decline in the headline CPI rate in five months, since a drop from 3.5 percent in April to 3.4 percent in May.
The Office for National Statistics, the primary government agency responsible for economic data, attributed the October slowdown primarily to slower increases in energy costs for gas and electricity.
These rose by 2.1 percent and 2.7 percent, respectively, compared to sharper rises of 13.0 percent and 8.0 percent in September, influenced by adjustments to the Ofgem energy price cap. Falling hotel prices also contributed downward pressure. However, this was partly offset by accelerating food inflation, which climbed to 4.9 percent from 4.5 percent, driven by higher prices for bread, cereals, and potatoes.
Core CPI, which excludes volatile items such as energy, food, alcohol, and tobacco, eased to 3.4 percent in October from 3.5 percent in September, reaching its lowest level since December 2024. The all-goods CPI rate dropped to 2.6 percent from 2.9 percent, marking the first fall in this subcategory since March 2025. Services inflation slowed to 4.5 percent from 4.7 percent, the lowest since December 2024.
Implications for Bank of England and Autumn Budget
This easing of the UK inflation rate, still above the Bank of England’s 2 percent target, has heightened expectations for an interest rate cut in December 2025. The central bank, which sets monetary policy to maintain price stability, may view the downward trend as a signal to reduce borrowing costs further.
The data arrives ahead of Chancellor Rachel Reeves’ Autumn Budget on November 27, 2025, potentially easing pressure on households amid ongoing cost-of-living challenges. Internationally, the UK’s October CPI rate exceeded Germany’s 2.3 percent and France’s 0.9 percent.
While the drop offers some relief, persistent food inflation and services costs suggest challenges remain. Economists forecast the rate to stay above 3 percent through the end of 2025.
