Einar H. Dyvik
Research expert covering Nordics and global data for society, economy, and politics
Inflation in the UK- Statistics & Facts
The inflation rate in the United Kingdom reached a 41-year-high of 11.1 percent in October 2022. Rising food and energy costs were responsible for much of this increase, with the inflation rate for housing and energy reaching 26.6 percent this month. Although inflation did fall from 10.1 percent to the target rate of two percent by 2024, inflation still took longer to fall than anticipated. After a long period of relatively low inflation, prices across the world surged in 2022. The global supply chain crisis, a knock-on effect of the COVID-19 pandemic, was one of the main reasons for the sudden onset of high inflation, followed by the Russian invasion of Ukraine, which disrupted the price of essential commodities in the food and energy market.
Inflation set to rise in 2025
After falling to 1.7 percent in September 2024, the UK's inflation has slowly been increasing, reaching three percent at the start of 2025. This increase is expected to continue, with prices rising by around 3.7 percent in the third quarter of 2025, before falling back to two percent in 2026. Although an initial annual rate of 2.6 percent was predicted for 2025 in late 2024, this was revised upward to 3.2 percent in the March 2025 Spring Statement. This increase comes as unwelcome news to UK households, still suffering through a cost of living crisis. In March 2025, around 59 percent of households in the UK reported that their cost of living had increased when compared to a month earlier. While this was down from 91 percent in August 2022, it is evident that many UK households are still under severe financial pressure. Although wages have been growing, wage growth did not keep up with inflation between October 2021 and June 2023, with wages recently growing by 5.9 percent in January 2025, compared with the CPI inflation rate of three percent.CPI, CPIH and RPI
In the UK, the three main inflation indices are the Consumer Price Index (CPI) , the Consumer Price Index including owner-occupiers' housing costs (CPIH), and the Retail Price Index (RPI). Although the CPI is the most recognizable of these three figures, the Office of National Statistics (ONS) promote the use of the CPIH as a more reliable indicator, as it includes some housing costs that the CPI does not. The RPI has been used for a longer period of time than the other two measures, but is seen to be outdated and flawed and has not been an official statistic since 2013. In general, the CPI is the most referenced figure despite the introduction of the CPIH and the historical context provided by the RPI. Although no longer classed as a national statistic, the UK government still uses the RPI rate to calculate annual rail fare increases and interest on student loan debt. As the RPI typically overstates inflation the UK government's continued usage of the index is controversial, especially as the CPI rate is used by them more often, such as for calculating pension payments.
