UK inflation rate accelerates to 3.8%

The annual inflation rate in the UK jumped to 3.8% in July 2025, the highest since January 2024, up from 3.6% in June and above market expectations of 3.7%.

The main upward pressure came from transport, where prices climbed 3.2% (vs. 1.7% in June), driven by a 30.2% surge in airfares, likely reflecting the timing of school summer holidays. Additional contributions came from higher motor fuel costs, sea fares, and roadside recovery services.

Inflation also increased in restaurants and hotels (3.4% vs. 2.6%), mainly from overnight hotel stays; and in food and non-alcoholic beverages (4.9% vs. 4.5%).

By contrast, housing and household services provided the main downward effect, with inflation easing to 6.2% from 6.7% amid softer owner-occupiers’ housing costs and rents.

On a monthly basis, CPI rose 0.1%, defying forecasts of a 0.1% decline but slowing from June’s 0.3% gain. Core inflation inched up to 3.8% from 3.7%.