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.
For more info see: https://www.bbc.co.uk/news/articles/cderznjj4r7o