The U.K.’s inflation rate remained at 3.8 per cent in September for the third month in a row
Many economists were predicting a rise to 4 per cent this month in line with Bank of England forecasting
However there was a drop in food price inflation while service prices remained steady with goods inflation slightly up
The September, August and July 2025 figures were the joint-highest recorded since January 2024, when the rate was 4.0%.
This month’s figure is significant, as it is normally used to calculate how much a range of benefits go up by in April
Rebecca Florisson, Principal Analyst, the Work Foundation at Lancaster University, a leading think tank for improving working lives in the UK says
“Cost of living pressures are persisting for workers and their families across the UK as inflation is at its joint highest level since January 2024 at 3.8%.
“Low-income workers, in particular, are feeling gloomy about their living standards a year into the Parliament. Food inflation has slowed but groceries are still 4.5% more expensive on the year, and the rising cost of essentials is particularly bad news for low-income households. The combination of years of wage stagnation and the cost of living crisis means only 42% of low paid workers say their pay is keeping up with costs – compared to 73% of higher paid workers.
“With inflation nearly at double the Bank of England target, it appears unlikely that rate setters will reduce interest rates in November, but all eyes will be on the Budget next month. The Chancellor needs to have low-income households at the front of her mind as she delivers her speech.
“Despite pressure to reduce welfare spending, the Government must protect the most vulnerable people by ensuring benefits continue to be linked to inflation. The Chancellor should prioritise boosting living standards in the years ahead because the alternative would push more of those out of work into poverty, forcing them to take on precarious and poorly paid work, while ultimately remaining reliant on the welfare system.”
