PwC comments on the latest ONS CPI figures - September 2025

Commenting on the latest Office of National Statistics Consumer Price Index released today,

Nabil Taleb, Economist at PwC, said:

“Headline CPI held steady at 3.8% in the 12 months to August 2025, unchanged from July and well above the Bank of England’s 2% target. On a monthly basis, prices rose by 0.3%, the same pace as August last year. The headline stability masks offsetting movements: transport, particularly airfares, pulled inflation down after driving last month’s rise, while restaurants and hotels pushed it up. These seasonal swings in travel costs show how volatile summer readings can be, while underlying pressures remain stubborn.

“Services inflation eased slightly from 5.0% to 4.7%, offering some tentative evidence that slower wage growth in labour-intensive sectors may be starting to filter through. But at more than double the Bank’s target, services inflation is still the key risk, reflecting persistent cost pass-through in areas like hospitality and education. Core CPI also edged down to 3.6%, from 3.8% in July, suggesting modest progress on underlying inflation, even as goods inflation ticked up from 2.7% to 2.8%.

“For the Bank of England, today’s release provides little reason to change course. The August Monetary Policy Report anticipated inflation peaking around 4% in September, and the MPC will want to see more convincing evidence that services and core inflation are on a downward path before easing further. The risk of cutting rates prematurely is that it could reignite price pressures just as expectations are stabilising. As a result, the Bank is likely to remain cautious: weighing weak growth and a loosening labour market against the need to anchor inflation expectations, with any cuts signalled as gradual adjustments rather than a rapid shift toward stimulus.”