London, November 23, 2025
The United Kingdom’s inflation rate remains elevated at 3.6% in October 2025 despite some recent easing, driven by persistent pressures in services, wages, and essential goods costs, continuing to impact households and businesses across the country.
UK inflation, while slightly lower than earlier peaks in the year, remains relatively high by historical standards. The main driver continues to be sticky price increases in the service sector compounded by sustained wage growth.
Services Inflation and Wage Growth
Core inflation, which excludes volatile items like food and energy, hovers between 3.4% and 3.7%, with services inflation rising approximately 4.5% annually. Labour-intensive sectors are notably affected, reflecting ongoing wage pressures. These factors maintain upward momentum on prices, indicating persistent cost pressures within the economy’s service industries.
Energy and Food Prices
Energy costs have seen a moderation owing to government-imposed price caps, with electricity and gas prices rising slower in recent months compared to 2022 and early 2025. However, the sharp increases experienced in 2022 continue to reverberate through the economy, placing a lasting upward effect on consumer bills and inflation overall. Meanwhile, food and non-alcoholic beverage prices continue to rise, adding to the burden on households and sustaining inflationary pressures.
Cost-of-Living Crisis and Housing Costs
The UK has been navigating a prolonged Cost of Living Crisis since 2022, with consumer price increases surpassing 20% over the last three years. Although the acute phase of the crisis has eased, strong wage growth combined with price stickiness ensures many households still confront elevated costs. Housing services remain a key contributor, with elevated but slowly decelerating price growth in this sector adding to overall inflation figures.
Looking ahead, inflation is expected to moderate gradually as supply chain challenges subside and economic conditions stabilize. Nevertheless, persistent wage growth and entrenched price rises in services suggest that inflation will remain above the levels seen in many other advanced economies for the foreseeable future.