No change for Inflation and Interest Rates

The Office for National Statistics (ONS) reported last week that the annual inflation rate for August 2025 was 3.8%, unchanged from July.

Airfare costs rose at a slower rate over the year; however, food costs continue to increase, reaching 5.1% in August. This is putting pressure on households and hospitality businesses alike.

 

UK inflation higher than in Europe

Interestingly, the ONS noted that UK inflation seems to be “significantly higher” than in France (0.8%) and Germany (2.1%).

The increase in employers’ National Insurance contributions is thought to be a factor in the disparity, with businesses passing these additional costs onto their customers.

No change in interest rate

The Bank of England’s Monetary Policy Committee (MPC) also met last week to review the current bank rate. With inflation remaining above the 2% target rate, the MPC voted to leave interest rates unchanged.

Takeaways

For businesses, the inflation figures show that costs are still rising. Higher food prices and the knock-on effects of National Insurance are keeping pressure on margins.

The fact that inflation has not climbed further is good news, and European inflation figures suggest there is potential for a lower inflation rate, but it may take some time before there is a real sense of stability.

Careful cashflow planning and regularly reviewing your financials remain key to ensuring that your business continues to grow and thrive.

 

See: https://www.bbc.co.uk/news/articles/cderznjj4r7o

 

September 2025