FX.co ★ UK Inflation Rate Steadies at 3.8%

In August 2025, the United Kingdom's annual inflation rate remained steady at 3.8%, consistent with the previous month of July and close to the peak levels recorded in January 2024. This figure aligned with market expectations. A notable decline was seen in the transport sector, where inflation slowed to 2.4% from 3.2%, driven by a 3.5% drop in airfares—the most significant downward influence. Additionally, a decrease in inflation was observed in services (4.7% down from 5%), recreation and culture (3.2% compared to 3.4%), and clothing and footwear (steadying at 0.2% from 0.3%). The rate for housing and utilities remained unchanged at 7.4%. Conversely, motor fuels exerted the most significant upward pressure on inflation. Other sectors experiencing an acceleration included restaurants and hotels (from 3.4% to 3.8%), food (from 4.9% to 5.1%), and furniture, household equipment, and maintenance (from 0.7% to 0.8%). On a monthly scale, the Consumer Price Index (CPI) increased by 0.3%, following a 0.1% rise in July, in line with predictions. Core inflation on an annual basis eased slightly to 3.6% from 3.8%, again meeting forecasted expectations.