UK inflation stays at 3.8% as meals worth rises sluggish for first time since March – enterprise dwell | Enterprise

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Some economists are saying that is in all probability the height in inflation. What does this imply for rates of interest?

Paul Dales, chief UK economist at Capital Economics, stated:

CPI inflation was decrease than feared in September, because it stayed at 3.8% relatively than rising to 4.0% or above. We doubt this may immediate the Financial institution of England to chop rates of interest from 4% in November. But it surely will increase the possibilities of the subsequent lower taking place by February in step with our forecast and it helps our view that rates of interest will likely be decreased to three% subsequent yr.

What’s extra, this may in all probability be the height in inflation. Our forecast is for CPI inflation to fall to three.5% or beneath in October, not least as a result of declines in utility and gas costs that we already learn about. Meals worth inflation could but rise additional, maybe again above 5.0% by December, however there are… good causes to count on it to fall again subsequent yr.

And if we’re proper in pondering that weak employment will considerably weigh on wage development subsequent yr, then CPI inflation could shock most individuals by falling to 2.0% by the top of subsequent yr.

Turning to the price range, Dales stated:

It’s attainable the chancellor will add to that development within the price range on 26 November, both by decreasing inflation immediately (slicing VAT on utilities from 5% to 0% would trim CPI inflation by 0.2ppts) or not directly as larger taxes chip away at financial exercise.

Share Petrol costs and airfares fell final month, however not as a lot as a yr earlier.

The common worth of petrol fell by 0.2p a litre between August and September to a mean of 134p a litre in September, however final yr costs fell by 5.5p a litre. Diesel costs had been down by 0.4p a litre to 141.8p a litre.

Air fares fell by 28.8% between August and September, the third-largest September lower for the reason that assortment of airfares modified from quarterly to month-to-month in 2001. Nonetheless, air fares fell by 34.8% a yr earlier, which was the most important September drop since 2001.

This meant annual transport inflation rose to three.8% from 2.4%.

This was offset by decrease costs for leisure actions, specifically dwell music concert events, the place month-to-month costs fell by 8.6% in contrast with an increase of 5.8% a yr earlier. Total, the annual inflation fee in recreation and tradition fell to 2.7% from 3.2%.

Right here’s our full story:

Share Up to date at 02.28 EDT

Introduction: UK inflation stays at 3.8% as meals worth rises sluggish for first time since March Good morning, and welcome to our rolling protection of enterprise, the monetary markets and the world financial system.

UK inflation was unchanged final month, defying expectations of an increase to 4%, with meals worth rises lastly slowing.

The annual fee of inflation, as measured by the buyer costs index (CPI), was 3.8%, the identical as August’s studying, in response to Workplace for Nationwide Statistics knowledge.

Inflation remains to be nearly double the Financial institution of England’s 2% goal, and has been above it for 12 months in a row.

The core fee of inflation, which strips out risky meals and vitality prices, dipped to three.5% from 3.6% in August.

That is excellent news for the chancellor, Rachel Reeves. She stated final week she would announce “a spread of insurance policies” in her 26 November price range to “bear down on a few of the prices that folks face”.

Importantly, meals costs dipped by 0.2% in September from August amid discounting at supermarkets, taking the annual development fee to 4.5%, from 5.1% in August.

It was the primary time since Could final yr that meals costs have fallen on the month; and the primary time since March this yr that the annual fee has slowed.

The Client Costs Index (CPI) rose by 3.8% within the 12 months to September 2025, unchanged from August 2025.

The September, August and July 2025 figures had been the joint-highest recorded since January 2024, when the speed was 4.0%.

Learn the article ➡️ pic.twitter.com/sQ6mUCGB11

— Workplace for Nationwide Statistics (ONS) (@ONS) October 22, 2025 Commenting on at present’s inflation figures for September 2025, ONS Chief Economist Grant Fitzner stated: (quote 1 of two) 💬 pic.twitter.com/vE9BMufbUW

— Workplace for Nationwide Statistics (ONS) (@ONS) October 22, 2025 Gold rose by 0.5% at $4,145 an oz. this morning after its largest one-day fall in 5 years.

The valuable steel tumbled greater than 5% on Tuesday, as a record-breaking rally in latest weeks reversed on the finish of the Diwali gold shopping for season. Gold fell as little as $4,003.39 an oz..

Alex Hill, managing director at Electus Monetary in Auckland, informed Reuters:

What goes up has to go down. You’ve had a market that’s gone parabolically larger, at some factors it’s going to get some aid.

Citi analysts wrote in a analysis notice:

Gold had run forward of the ‘debasement’ story. We had flagged that costs had been stretched to ranges beforehand related to pullbacks and had decreased our lengthy place accordingly.

The Agenda

9.30am BST: UK home costs

Midday BST: US MBA Mortgage functions

1.25pm BST: ECB president Christine Lagarde speech

3.30pm BST: US EIA Crude oil shares change

7pm BST: Annual Metropolis banquet at Mansion Home and speeches

Share Up to date at 02.31 EDT

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