UK inflation rate lower than expectations at 3.8%

The UK inflation rate has remained stable at 3.8% in September, which was lower than expected, official figures show.

Prices for groceries also rose at their slowest rate in more than a year, according to the Office for National Statistics (ONS).

ONS chief economist Grant Fitzner noted that the cost of food and non-alcoholic drinks fell, “for the first time since May last year”.

Chancellor Rachel Reeves said she was overall “not satisfied with the numbers” on inflation, while shadow chancellor Mel Stride said it was “pushing up the cost of living”.

Britain’s inflation rate was also 3.8% in July and August, according to the ONS, which is still much higher than the Bank of England’s 2% target.

However, the central bank’s economists had forecast inflation to rise to 4% in September.

Mr Fitzner said: “The largest upward drivers came from petrol prices and airfares, where the fall in prices eased in comparison to last year.”

He added: “These were offset by lower prices for a range of recreational and cultural purchases including live events.”

The chancellor said: “I am not satisfied with these numbers. For too long, our economy has felt stuck, with people feeling like they are putting in more and getting less out.”

Reeves added that she was determined to ensure the government supports people “struggling with higher bills and the cost of living challenges, deliver economic growth and build an economy that works for, and rewards, working people.”

In a post on X, the shadow chancellor said that inflation running at nearly double the Bank of England’s target was “pushing up the cost of living and punishing those Labour promised to protect”.

Stride claimed national insurance increases, government borrowing and not having “the backbone to reduce spending” were all contributing to inflation.

The inflation rate for food and non-alcoholic drinks was 5.1% in the year to August and is now down to 4.5% for the year to September – a small difference that might not always be easy to spot at the supermarket.

The overall inflation figure for September matters more than most other months.

That’s because the government usually uses this as the bench-mark for the benefits uprating in April.

It means millions of people depending on benefits are likely to see a 3.8% increase in their payments next year.

The inflation figures for the past three months were the joint-highest recorded since January 2024, when the rate was 4%, according to the ONS.

Inflation in the UK remains well below the 11.1% figure reached in October 2022, which was the highest rate for 40 years.