PwC comments on the latest ONS August 2025 CPI figures

Commenting on the Office of National Statistics Consumer Price Index for July 2025,

Adam Deasy, Economist at PwC, comments:

"Headline CPI continues to climb, hitting 3.8% in July 2025. As expected, the summer seasonals drove the change: we saw large increases in airfares, likely due to school holidays, and hotel prices surged – possibly influenced by the ‘Oasis effect’. This demonstrates the volatility that summer readings can bring and pushes inflation to an uncomfortable new peak since January 2024.  

“Despite recent falls in earnings growth, the Bank of England sees the all-important services inflation figure continuing to rise through the year, and the increase from 4.7% to 5% in July may indicate that it’s right. This, together with higher-than-expected food inflation through much of 2025, looks poised to push inflation to a peak of 4% later this year, double the Bank’s 2% target. 

“Although the path back to target is taking a little longer - and peaking a little higher - than previously expected, as far as the Bank is concerned, we are still on track. The key question is whether the elevated inflation we see on the way embeds itself in expectations, and impacts price and wage-setting in the medium-term. For now, the combination of faster price rises and resilience in real GDP growth will see Bank sticking to its ‘gradual and careful’ approach, with markets expecting one more cut at most this year.”