The UK’s inflation rate stayed steady at 3.8% in September, surprising many economists who had predicted a slight rise. According to the Office for National Statistics (ONS), the figure came in lower than expected, offering some relief after months of economic uncertainty.
Groceries and household essentials have also seen slower price rises, marking the weakest increase in food prices in over a year. The ONS reported that the cost of food and non-alcoholic beverages actually dropped for the first time since May of last year, showing early signs that the cost of living crisis may be easing slightly.
Grant Fitzner, the ONS’s chief economist, explained that this drop in grocery prices contributed to stabilising inflation. However, he warned that while prices are not rising as quickly, households are still feeling pressure from consistently high costs across essential goods and services.
Despite the slight progress, Chancellor Rachel Reeves expressed dissatisfaction with the overall figures, saying she was “not satisfied” with the current state of inflation. Meanwhile, Shadow Chancellor Mel Stride argued that inflation levels were still pushing up living costs for millions of families.
The inflation rate has remained unchanged for three consecutive months, staying at 3.8% since July. While this marks a period of stability, it is still almost double the Bank of England’s target rate of 2%, indicating that the economy remains under strain.
Interestingly, the Bank of England had anticipated inflation to climb to 4% in September, meaning the lower figure was a welcome surprise. However, the ONS highlighted that the biggest upward pressures on inflation came from petrol prices and airfares, which did not fall as sharply as they did last year.
At the same time, lower prices for recreational and cultural activities, such as concerts and live events, helped balance out the higher costs in other sectors. This mixture of influences kept inflation level overall rather than causing a further rise.
Data from the ONS shows how dramatically inflation has fluctuated in recent years. From around 1.8% in early 2020, it dropped to nearly zero during the pandemic, before soaring to 11.1% in October 2022—the highest level in four decades. Since then, inflation has steadily fallen, reaching a low of 1.7% in September 2024 before climbing again to this year’s consistent 3.8%.
When it comes to food and drink, the annual inflation rate fell from 5.1% in August to 4.5% in September, a small but meaningful reduction. While consumers might not immediately notice the difference in supermarkets, the slowing pace of price rises indicates a gradual improvement.
Mr Fitzner told BBC Radio 4’s Today programme that food prices remain “quite high” but welcomed the downward shift, calling it “a small glimmer of hope.” He emphasised that this is just one month’s data, suggesting it’s too early to declare a clear trend, though it’s a promising sign for struggling households.
Paul Dales, chief UK economist at Capital Economics, echoed this cautious optimism, suggesting that inflation may now have reached its peak. While he expects some categories, like food, to fluctuate in the coming months, he said that overall, “this will probably be the peak in inflation.”
Despite the recent progress, many experts still question why inflation remains stubbornly high. Chancellor Reeves said the economy has “felt stuck for too long,” with people “putting in more and getting less out.” She reaffirmed the government’s commitment to helping households with rising bills and creating an economy that rewards hard work.
Mel Stride, in a post on X (formerly Twitter), criticised the government, saying that inflation close to twice the central bank’s target continues to “punish those Labour promised to protect.” He blamed tax increases, high borrowing, and a lack of spending restraint as factors keeping prices elevated.
The September inflation rate also carries extra importance because it typically determines the annual uprating of benefits and state pensions the following April. This means that those on benefits are expected to see a 3.8% increase in their payments next year, helping to offset some of the cost-of-living pressures.
Meanwhile, the state pension will likely rise by 4.8%, as the “triple lock” guarantees increases in line with whichever is highest: inflation, wage growth, or 2.5%. Since average earnings outpaced inflation this year, pensioners will benefit from a larger rise than benefit claimants.
Although inflation is still higher than desired, it is far below the 11.1% peak in 2022, a reminder of how far the UK has come in reining in price surges. However, the data also underlines how persistent inflationary pressures remain—a sign that Britain’s road to economic stability may still take time.
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