CPI inflation rise to 3.8%: what it means for the UK

CREATED BY ROGER EDDOWES Published: 18/09/2025 @ 09:00AM #CPIInflationRise #UKeconomy #ONSdata #CostOfLiving #BankOfEngland #SmallBusinessUK

Here are my thoughts on the CPI inflation rise to 3.8% and why it matters to both business and consumers. Prices are heating up before likely cooling off in a few months. Small firms should prep for volatility and policy shifts ...

CPI inflation rise, Prices climb to the skies, Wallets feel the squeeze

The latest ONS data shows the inflation rate ticking back up to 3.8%, and the CPI inflation rise lands at the highest level since January 2024, with summer holiday air travel adding heat. While this isn't a return to last year's extremes, it still nudges consumer prices higher and keeps households cautious.

That means another round of price sensitivity for essential
spending and a tricky balancing act for policymakers!

The Bank of England expects the headline rate to edge towards roughly 4% before easing back toward the 2% target, keeping a watchful eye on services and travel. This outlook implies inflation is sticky rather than spiralling, yet persistent enough to shape interest rate thinking. For borrowers and savers, the path looks choppy, not chaotic.

The timing matters, as the ONS released new data today (17th September 2025) and the MPC bank rate decision is following tomorrow (18th September 2025). If the data confirm the CPI trend, the Committee may feel less urgency to cut quickly. Equally, a softening in consumer prices would let them signal a gentler landing.

Small businesses will want to plan for short bursts of price pressure even as the medium‑term path moderates. Supplier quotes may creep up, especially in services linked to travel and logistics, while wage expectations track the headline inflation rate. Passing through costs to customers will require careful timing and clear communication.

The Finance Bill and November's Autumn Budget 2025 loom large, and fiscal choices could either cushion or compound the CPI trajectory. Targeted reliefs, investment incentives, or adjusted business rates would filter into pricing decisions and margins. Owners should scenario‑plan for at least three budget outcomes and stress‑test cash flow under each.

Cash discipline is still king while consumer
prices move unevenly!

I'm advising many of my clients to lock in key inputs, renegotiate energy and shipping where possible, and refine inventory to match demand volatility. A little operational rigour now can offset a surprisingly sharp monthly CPI print later.

Households will feel the cost-of-living pinch most in discretionary categories, with travel and leisure likely to stay noisy. For the UK economy, the near‑term story is resilience with frictions, not recession with freefall. Patience and precision beat panic when navigating a CPI inflation rise.

Ultimately, I believe the next two data points will frame sentiment: the ONS data update and the MPC signal on rates. If forecasts hold, inflation should cool into 2026, helped by steadier energy bases and calmer services.

Until then, I feel that disciplined pricing, tight cost control, and clear customer messaging are the best responses to this CPI inflation rise.

Until next time ...

ROGER EDDOWES
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About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach. Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.

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