London Daily

Focus on the big picture.
Saturday, Oct 18, 2025

UK inflation hits fresh 40-year high of 9.4% and ‘could hit 12% in October’

UK inflation hits fresh 40-year high of 9.4% and ‘could hit 12% in October’

May’s 9.1% figure exceeds analysts’ expectations, with some saying Bank’s 11% autumn forecast is low

The prospect of inflation hitting 12% this autumn is looming larger after dearer fuel and food pushed the official measure of the cost of living to a fresh 40-year high.

A one-month increase in petrol prices not seen since at least the late 1980s, coupled with across the board increases in food staples such as eggs, milk, cheese and vegetables sent Britain’s annual inflation rate up from 9.1% to 9.4% in June.

With the annual energy price cap predicted to rise from just under £2,000 to more than £3,000 in October, analysts warned there was worse to come.

Paul Dales, chief UK economist at Capital Economics said there was some sign global price pressures were being replaced by higher domestically generated inflation.

“We still think inflation will rise to 12% in October and that interest rates will be raised from 1.25% to 3%, although it’s finely balanced whether they rise by 25bps or 50bps in August,” Dales said.

The Bank of England said last month it expected the annual inflation rate, which stood at 2.5% in June 2021 and has risen for nine months in a row, to peak at just over 11% in the autumn before falling sharply next year.

The City had been forecasting inflation would pick up to 9.3% after the price of unleaded petrol rose by about 20p a litre in June. Markets are expecting the Bank to respond to the highest inflation since 1982 by raising interest rates by either 0.25 or 0.5 percentage points next month. Andrew Bailey, the Bank’s governor said both would be on the table at the August meeting of its monetary policy committee.


Prices rose by 0.8% between May and June – the highest June increase since modern records began in 1988 – compared with a 0.5% jump in the same month a year earlier.

The ONS chief economist, Grant Fitzner, said: “Annual inflation again rose to stand at its highest rate for over 40 years. The increase was driven by rising fuel and food prices; these were only slightly offset by falling secondhand car prices.”

The UK’s statistical agency said the cost of motor fuels had risen by more than 42% in the year to June, with petrol and diesel hitting new highs last month. More expensive fuel was only partly offset by a drop in the price of secondhand cars.


Food was the other big factor behind the inflation rate rise, with particularly sharp increases in the cost of milk, eggs and cheese all contributing to a 1.2% increase between May and June and a 12-month rise of 9.8%.

The Resolution Foundation thinktank said the inflation rate for the poorest 10% of households was already running at 10.6% because they spent a higher proportion of their incomes on food and energy.

TUC general secretary Frances O’Grady said: “Families are under immense pressure as food and energy costs soar, and companies raise prices much faster than wages.”

Core inflation – which strips out food, energy, alcohol and tobacco – stood at 5.8% last month, down from 5.9% in the year to May.


Yet more inflationary pressure could be in the pipeline, according to separate ONS data for producer prices, which measures how much firms are paying for their fuel and raw material and the prices they charge their customers.

“The cost of both raw materials and goods leaving factories continued to rise, driven by higher metal and food prices respectively,” Fitzner said. “These increases saw raw materials post their highest annual increase on record, with manufactured goods at a 45-year high.”

The chancellor, Nadhim Zahawi, said: “Countries around the world are battling higher prices and I know how difficult that is for people right here in the UK, so we are working alongside the Bank of England to bear down on inflation.

“We’ve introduced £37bn-worth of help for households, including at least £1,200 for 8 million of the most vulnerable families and lifting over 2 million more of the lowest paid out of paying personal tax.”

His Labour counterpart, Rachel Reeves, said: “The cost of living crisis is leaving families more worried every day but all we get from the Tories is chaos, distraction and unfunded fantasy economics.”

Newsletter

Related Articles

0:00
0:00
Close
S&P Downgrades France’s Credit Rating, Citing Soaring Debt and Political Instability
Ofcom Rules BBC’s Gaza Documentary ‘Materially Misleading’ Over Narrator’s Hamas Ties
Diane Keaton’s Cause of Death Revealed as Pneumonia, Family Confirms
Former Lostprophets Frontman Ian Watkins Stabbed to Death in British Prison
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
Outsider, Heroine, Trailblazer: Diane Keaton Was Always a Little Strange — and Forever One of a Kind
Dramatic Development in the Death of 'Mango' Founder: Billionaire's Son Suspected of Murder
Two Years of Darkness: The Harrowing Testimonies of Israeli Hostages Emerging From Gaza Captivity
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
HSBC Confronts Strategic Crossroads as NAB Seeks Only Retail Arm in Australia Exit
U.S. Chamber Sues Trump Over $100,000 H-1B Visa Fee
Shenzhen Expo Spotlights China’s Quantum Step in Semiconductor Self-Reliance
China Accelerates to the Forefront in Global Nuclear Fusion Race
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
Surging AI Startup Valuations Fuel Bubble Concerns Among Top Investors
Australian Punter Archie Wilson Tears Up During Nebraska Press Conference, Sparking Conversation on Male Vulnerability
Australia Confirms U.S. Access to Upgraded Submarine Shipyard Under AUKUS Deal
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
Brands Confront New Dilemma as Extremists Adopt Fashion Labels
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Erika Kirk Delivers Moving Tribute at White House as Trump Awards Charlie Presidential Medal of Freedom
British Food Influencer ‘Big John’ Detained in Australia After Visa Dispute
ScamBodia: The Chinese Fraud Empire Shielded by Cambodia’s Ruling Elite
French PM Suspends Macron’s Pension Reform Until After 2027 in Bid to Stabilize Government
Orange, Bouygues and Free Make €17 Billion Bid for Drahi’s Altice France Telecom Assets
Dutch Government Seizes Chipmaker After U.S. Presses for Removal of Chinese CEO
Bessent Accuses China of Dragging Down Global Economy Amid New Trade Curbs
U.S. Revokes Visas of Foreign Nationals Who ‘Celebrated’ Charlie Kirk’s Assassination
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
DJI Loses Appeal to Remove Pentagon’s ‘Chinese Military Company’ Label
EU Deploys New Biometric Entry/Exit System: What Non-EU Travelers Must Know
Australian Prime Minister’s Private Number Exposed Through AI Contact Scraper
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
China’s lesson for the US: it takes more than chips to win the AI race
Australia Faces Demographic Risk as Fertility Falls to Record Low
California County Reinstates Mask Mandate in Health Facilities as Respiratory Illness Risk Rises
Israel and Hamas Agree to First Phase of Trump-Brokered Gaza Truce, Hostages to Be Freed
French Political Turmoil Elevates Marine Le Pen as Rassemblement National Poised for Power
China Unveils Sweeping Rare Earth Export Controls to Shield ‘National Security’
The Davos Set in Decline: Why the World Economic Forum’s Power Must Be Challenged
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
×