PwC comments on the latest ONS October 2025 CPI figures

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

Adam Deasy, Economist at PwC, said: 

“Headline CPI has held steady at 3.8% once again in the 12 months to September 2025. This is a surprise to the downside, as forecasters generally expected an increase to 4.0%. The largest upward contributor was transport prices, where petrol and flight costs fell by less than last year, but was offset by drops in furniture and household goods, recreation and culture, and food prices. While this is positive in relative terms, CPI still sits at nearly double the Bank of England’s 2% target, and the UK remains an outlier among major economies; the next highest in the G7 is the US at 2.9%. 

“Services inflation remained at 4.7%, while food prices increase slowed substantially from 5.1% to 4.5% on a year-on-year basis. This will be welcome news for the Bank of England. Given their visibility to consumers, food prices are a key driver of inflation expectations, which continue to increase and sit significantly higher than the Bank of England’s own inflation expectations for 2026. If these expectations stay elevated, they risk becoming self-fulfilling, influencing wage and price-setting behaviour across the economy. 

“So although this may yet mark the turning point in which inflation could fall back to target, the Bank of England will perhaps want clearer signs that this is indeed the peak before moving further on rate cuts. MPC members Huw Pill and Catherine Mann have both recently stressed the need for a cautious approach, with rates remaining elevated for longer. With no new CPI data before the November meeting, and potential inflationary pressure from tax measures in the Autumn Budget, it's unclear whether this softer print is enough to prompt action next month.”