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.
If you would like advice on how to make your business grow, please get in touch. We are always happy to help you!
The Prudential Regulation Authority (PRA) has confirmed that the Financial Services Compensation Scheme (FSCS) deposit protection limit will increase from £85,000 to £120,000 from the start of December.
The Intellectual Property Office (IPO) has confirmed plans to raise its fees by an average of 25% from 1 April 2026, subject to parliamentary approval. The change will affect applications and renewals for patents, trademarks, and designs.
