Is Inflation Finally Cooling Down?

Styles & Associates
7 hours ago
3 min read

What the October Numbers Mean for Your Business

Looking at the big economic picture is vital for managing your cash flow and planning for the year ahead. On the 19^th of November the Office for National Statistics (ONS) released its inflation figures for October 2025, and there is some cautious good news in the mix for business.

Here is our breakdown of what the latest numbers say and what they mean for you and your business.

The Headlines: A Step in the Right Direction

The headline rate of inflation (CPI) fell to 3.6% in October, down from 3.8% in September. While this is still above the Bank of England’s 2% target, it is a move in the right direction.

Why the drop?

The drop is mainly attributed to energy prices. While bills are still high, they haven't risen as sharply as they did this time last year, which helps pull the overall figure down.

Where Costs Are Still Rising

However, for our clients running cafes, shops, or service businesses, the picture might feel a bit different. Two key areas remain high:

Food & Drink: Inflation rose to 4.9% from 4.5% in September, affecting running costs within the hospitality industry.
Services Inflation: This dipped slightly to 4.5% from 4.7%, but it remains high.

The ONS summarised:

The Consumer Prices Index (CPI) rose by 3.6% in the 12 months to October 2025, down from 3.8% in September.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 3.8% in the 12 months to October 2025, down from 4.1% in September.

On a monthly basis, CPIH rose by 0.4% in October 2025, compared with a rise of 0.6% in October 2024.

On a monthly basis, CPI rose by 0.4% in October 2025, compared with a rise of 0.6% in October 2024.

Housing and household services made the largest downward contribution to the monthly change in both CPIH and CPI annual rates; food and non-alcoholic beverages made the largest offsetting upward contribution.

Core CPIH (CPIH excluding energy, food, alcohol and tobacco) rose by 3.7% in the 12 months to October 2025, down from 3.9% in the 12 months to September; the CPIH goods annual rate fell from 2.9% to 2.6%, while the CPIH services annual rate fell from 4.9% to 4.6%.

Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 3.4% in the 12 months to October 2025, down from 3.5% in the 12 months to September; the CPI goods annual rate fell from 2.9% to 2.6%, while the CPI services annual rate fell from 4.7% to 4.5%.

What Does This Mean for Your Business?

Inflation of 3.6% means prices are still rising, just a little slower than before. For businesses, this presents a few specific challenges:

Pricing Strategy: With food and service costs still creeping up, you may be hesitating to raise your own prices. It’s a delicate balance. Businesses should review their margins to see if small, incremental increases are necessary to protect profitability without scaring off customers.
Wage Planning: With the cost of living still a pressure point for employees, wage demands are unlikely to disappear. Efficient payroll planning is going to be key as we head into 2026.
Cash Flow: "Sticky" inflation means your money doesn't go quite as far. Keeping a close eye on your monthly outgoings is more vital than ever.

We Are Here to Help

Whether you are a sole trader needing to tighten your belt or a limited company planning for growth despite the economic headwinds, we are here to support you.

We offer fixed-fee packages so you never have to worry about unexpected bills. Get in touch with the team today on 01420 541 554 to discuss our range of services.