FX.co ★ UK Inflation Rate Accelerates to 3.8%

The UK's annual inflation rate surged to 3.8% in July 2025, marking the highest level since January 2024. This is a slight increase from June's rate of 3.6% and surpasses market predictions of 3.7%. The rise was predominantly driven by the transport sector, where prices rose by 3.2%, compared to 1.7% in June. This was largely due to a significant 30.2% jump in airfares, likely influenced by the school summer holidays. Additionally, increases were seen in motor fuel prices, sea fares, and roadside recovery services. Inflation also rose in the restaurant and hotel sectors to 3.4% from 2.6%, primarily due to more expensive overnight hotel stays, and in the prices of food and non-alcoholic beverages, which climbed to 4.9% from 4.5%. Conversely, housing and household services experienced a decrease in inflation, falling to 6.2% from 6.7%, thanks to reduced costs for homeowner housing and rents. On a monthly basis, the Consumer Price Index (CPI) edged up by 0.1%, contradicting forecasts of a 0.1% drop, though it slowed from June's 0.3% increase. Core inflation also rose slightly from 3.7% to 3.8%.