October inflation numbers - 19th November 2025

The UK CPI inflation rate for October 2025 was 3.6%, down 0.2% from September.

CPI inflation for October was down 0.2% from the previous month at 3.6%. That is in line with market and Bank of England expectations. In its November Monetary Policy Report, the Bank of England said “[September inflation]… is likely to be the peak. Beneath the headline numbers, underlying price and wage pressures have continued to ease. Inflation is likely to fall to close to 3% early next year before gradually returning towards to the 2% target over the subsequent year.” 

The 3.6% figure will give some small relief to the beleaguered Chancellor, as she has recently been placing emphasis on reducing the cost of living in the Budget. Her measures are expected to include cuts to gas and electricity bills, although, notably, yesterday’s Financial Times contained an interview with Huw Pill, the Bank of England’s chief economist, saying that such one-off measures as removing 5% VAT would be looked through when making rate-setting judgements because the Bank’s target viewpoint is two years out.

The UK CPI reading was up 0.4% between September and October, 0.2% less than in the corresponding period of 2024. The CPI/RPI gap remained at 0.7% with the RPI annual rate also falling by 0.2% (to 4.3%). Over the month, the RPI index rose by 0.3%. 

The Office for National Statistics (ONS)’s favoured CPIH index was down 0.3% at an annual 3.8%, reducing its historically wide margin above the CPI. As we have regularly said in recent months, a large part of that excess is due to the owner occupiers’ housing (OOH) category, which has a 17.1% weighting in the CPIH but is absent from the CPI. The OOH inflation rate dropped 0.4% to 4.8%, 3.2% off its peak January 2025 level and back to the level last seen in August 2023. 

The ONS attributed the stable CPIH inflation to:

Main downward drivers

Housing and household services. The 12-month inflation rate for housing and household services was 5.0% in October 2025, down from 5.9% in September. On a monthly basis, prices rose by 0.5% in October 2025, compared with a rise of 1.3% a year ago.

Ironically, the main impact was from October’s Ofgem 2.2% quarterly price cap increase, which replaced an increase from a year ago of 9.5%. For gas, prices rose by 2.1% in the 12 months to October 2025, compared with a rise of 13.0% in September 2025, whereas electricity prices rose by 2.7% in the 12 months to October 2025, compared with a rise of 8.0% in September 2025. 

Restaurants and hotels. The 12-month inflation rate for this division was 3.8%, down from 3.9% in September. On a monthly basis, prices were little changed in October 2025, compared with a rise of 0.2% a year ago. The largest downward effect came from accommodation services where monthly prices fell by 2.2%, compared with a fall of 0.2% a year ago.

Transport. Prices in the transport division rose overall by 3.8% in the 12 months to October 2025, the same rate as the 12 months to September. On a monthly basis, prices were little changed in October 2025, compared with a rise of 0.1% a year ago. The largest downward effect came from air fares, which rose by 1.7% between September and October 2025, against 6.3% between September and October last year. 

As the Chancellor contemplates the first fuel duty increase since October 2010, the largest upward effect came from motor fuels, with petrol up 0.7p a litre over the year and diesel up 3.9p a litre. 

Main upward driver 

Food and non-alcoholic beverages. The 12-month inflation rate for food and non-alcoholic beverages was 4.9% in October 2025, up from 4.5% in September. On a monthly basis, food and non-alcoholic beverages prices rose by 0.5% in October 2025, compared with a rise of 0.1% a year ago.

Five of the twelve broad CPI divisions saw annual inflation increase, while six fell and one was unchanged. The categories with the highest annual inflation rate were Education (7.6%), Alcoholic beverages and tobacco (5.9%) and Housing, water, electricity, gas and other fuels (5.2%). 

Core CPI inflation (CPI excluding energy, food, alcohol and tobacco) fell 0.1% to 3.4%. Goods inflation fell 0.3% to 2.6%, while services inflation, a focus for the Bank of England, was down 0.2% at 4.5%. 

The ONS restarted the issue of its Producer Price Inflation indices last month, but says that “The accredited official statistics status of these statistics is suspended, pending a review by the Office for Statistics Regulation.” With that caveat in mind:

• Producer input prices rose by 0.5% in the year to October 2025, down from a revised rise of 0.7% in the year to September 2025.

• Producer output (factory gate) prices rose by 3.6% in the year to October 2025, up from a revised rise of 3.5% in the year to September 2025.

Source: Techlink Professional

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