UK inflation holds steady at 3.8% in September

According to the latest data from the Office for National Statistics (ONS) released this month, the rate of inflation in the UK remained unchanged at 3.8% in the 12 months to September 2025. This marks the third consecutive month at that rate.

Key figures and what’s driving them

The broader measure known as the Consumer Prices Index including owner-occupiers’ housing costs (CPIH) showed a 12-month rate of 4.1%, also unchanged from August.

On a monthly basis:

• CPI was 0.0%, meaning no change from August.

• CPIH rose by 0.1%, matching the monthly rise a year earlier

By category:

• Transport saw a significant upward influence, notably motor fuels and air fares.

• Food and non-alcoholic beverages inflation eased to 4.5% (from 5.1% in August).

• Housing and household services inflation slowed to 5.9%, down from 6.0%.

What this means for employers and businesses

For payroll, wage-setting and budgeting purposes, the stabilisation in inflation offers some clarity. The rate remaining at 3.8% means that cost expectations for things like wage increases, statutory payments and general overheads remain in a known zone rather than accelerating.

However, the fact that inflation is still relatively elevated, especially for housing and services, means that pressures remain: households are continuing to feel the pinch, particularly where housing or transport costs are concerned.

For businesses, this suggests that although headline inflation is not rising, cost control remains important. With services inflation stuck around 4.9% and housing cost inflation around 5.9%, firms will want to monitor how this feeds into wage demands or benefit costs.

Outlook and considerations

With inflation holding steady, the spotlight shifts to what happens next.

Key things to watch:

• Whether cost-pressures in specific sectors (transport, housing) ease further or reverse.

• How wage growth and recruitment pressures respond to this inflation backdrop.

• The upcoming fiscal and monetary policy signals: if inflation fails to fall further, there may be implications for interest rates and cost management for employers.

The next ONS release is scheduled for 19th November 2025.

Source: ONS