UK inflation climbed to 3.8% in July 2025, the sharpest rate since January 2024, piling more pressure on households and businesses already dealing with higher borrowing costs. The Consumer Prices Index (CPI) increase exceeded economists’ forecasts of 3.7%, raising fresh questions over whether the Bank of England will delay further interest rate cuts.
Transport was the biggest driver of the rise. Air fares jumped 30% between June and July, the steepest July rise since 2001, as families travelled for the school holidays. Petrol and diesel prices also rose over the month, reversing last year’s summer dip.
UK News — More from EyeOnLondon
Explore our latest stories and keep reading for more context, analysis and updates.
Treasury considers overhaul of stamp duty and council tax
Proposals could reshape the way property is taxed in the UK, with long-term effects on buyers and local revenue.
Read the storyMore UK News
‘Skibidi’ and ‘tradwife’ added to Cambridge Dictionary
New entries reflect how internet slang and cultural trends are shaping the English language.
Read the storyMore UK News
Horse racing to strike over tax rise on sports betting
Industry groups warn that higher betting levies could damage racing’s funding model and heritage.
Read the storyMore UK News
Food and drink inflation climbed again, reaching 4.9% in July, up from 4.5% in June, marking the fourth month in a row of rising prices. The knock-on effect is already being felt in households’ everyday budgets, with higher grocery bills and increased travel costs stretching incomes.
Chancellor Rachel Reeves admitted more action is needed to relieve the pressure of the cost-of-living squeeze. The surge also means regulated rail fares could rise by nearly 6% in 2026, since they are capped at one percentage point above July’s Retail Prices Index. According to the Office for National Statistics, transport and housing costs have been the most significant contributors to inflation over the past year.
In Westminster, cost pressures have already become a flashpoint. Earlier this month, debates around new welfare reductions and squeezed public services underscored the tension between curbing government borrowing and protecting households. Read our coverage here.
For families planning ahead, the increase will shape everything from food budgets to transport. Support is available from charities such as Citizens Advice for those struggling to keep up with rising bills, while MoneyHelper offers guidance on debt and budgeting during periods of high inflation.
For more stories on London’s business, finance, and economy, follow EyeOnLondon for informed and independent reporting.
Follow us on:
Subscribe to our YouTube channel for the latest videos and updates!
We value your thoughts! Share your feedback and help us make EyeOnLondon even better!
