UK Inflation Rate Steadies at 3.8%

The UK’s annual inflation rate held steady at 3.8% in August 2025, unchanged from July and remaining near the highs last seen in January 2024, in line with expectations. Inflation slowed for transport (2.4% vs 3.2%), with prices for air fares falling 3.5% and making the largest downward contribution. Inflation was also lower for services (4.7% vs 5%), recreation and culture (3.2% vs 3.4%) and clothing and footwear (0.2% vs 0.3%) and steadied for housing and utilities (7.4%). On the other hand, the largest upward contribution came from motor fuels. Inflation also inflation accelerated for restaurants and hotels (3.8% vs 3.4%), food (5.1% vs 4.9%), and furniture, household equipment and maintenance (0.8% vs 0.7%). On a monthly basis, the CPI rose 0.3%, following a 0.1% gain in July and matching forecasts. Annual core inflation eased to 3.6% from 3.8%, matching forecasts.