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UK inflation remains at 3.8% in August as food costs grow

September 17, 2025
in Business
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UK inflation remains at 3.8% in August as food costs grow
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Inflation in the year to August remained at 3.8%, according to official figures, after food costs continued to rise.

The pace of price rises matched the inflation rate in July but as some costs such as airfares rose at a slower rate, food was more expensive with cheese, fish and vegetable prices all rising.

The data emerged as the Bank of England’s Monetary Policy Committee meets to discuss interest rates ahead of an announcement on Thursday.

Inflation remains above the Bank’s 2% target but the central bank is not expected to cut borrowing costs.

The Office for National Statistics (ONS), which publishes the figures, said inflation in the UK was “significantly higher” than the estimates for large European economies such as France and Germany.

In August, France’s inflation was 0.8% while Germany recorded price growth of 2.1%.

Yael Selfin, chief economist at KPMG UK, said Britain had become “an outlier in recent months on inflation compared to other major economies”.

She said: “Since April, the rise in inflation has been driven largely by domestic policy choices, including the increase in employers’ National Insurance Contributions.

“These higher costs have been passed on by businesses to consumers, feeding through into higher headline inflation.”

Food price inflation have risen for the fifth month in a row, the ONS said, reaching 5.1% in the year to August – the highest for 18 months.

Chancellor Rachel Reeves, who will present the Budget on 26 November, said: “I know families are finding it tough and that for many the economy feels stuck.

“That’s why I’m determined to bring costs down and support people who are facing higher bills.”

The British Retail Consortium (BRC) said that food costs were outstripping average wage growth which the ONS said reached 4.7% between May and July.

Kris Hamer, director of insight at the BRC, said: “With food inflation now outpacing wages, many families will be struggling with the rising cost of living.”

However, the prices of some goods eased such as clothing and footwear which the BRC said was “driven in part by retailers discounting the last of their summer collections”.

It also said “key staples such as cereals and pasta fell in price on the month”.

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