FX.co ★ UK Inflation Rate Slows as Expected

The United Kingdom's annual inflation rate decreased to 3.6% in October 2025, marking the lowest point in four months, down from the consistent 3.8% observed over the prior three months. This figure met the expectations of both the Bank of England and market analysts. Notably, there was a slowdown in price increases for housing and utilities, dipping to 5.2% from 7.3%, with significant reductions in gas prices at 2.1% compared to 13%, and electricity prices at 2.7%, down from 8%. This change is attributed to the Office of Gas and Electricity Markets' revised energy price cap in October. Additionally, more modest price increases were noted in the sectors of restaurants and hotels (3.8% compared to 3.9%), services (4.5% down from 4.7%), and clothing and footwear (0.3% as opposed to 0.5%). However, transportation inflation remained steady at 3.8%, while inflation for food and non-alcoholic beverages rose to 4.9% from 4.5%, and recreation and culture saw an increment to 2.9% from 2.7%. Month-over-month, the Consumer Price Index (CPI) increased by 0.4%, following a stagnant reading in September, aligning with predictions. Moreover, annual core inflation descended to a six-month low of 3.4%.