UK inflation rose higher than anticipated in July 2025, mainly driven by elevated summer travel costs and persistently increasing food prices. The Consumer Prices Index (CPI) climbed to 3.8% in the 12 months to July, up from 3.6% in June, according to the Office for National Statistics (ONS). This reading exceeded economists’ predictions, who expected inflation to hit 3.7%.
The rise marks the highest inflation rate since January 2024, when CPI reached 4%. The ONS highlighted that the school summer holidays were a major factor, leading to a notable increase in airfares – the largest July rise in airfare costs since 2001, when the methodology for tracking airfares changed to a monthly measure.
Grant Fitzner, chief economist at the ONS, explained that “the primary factor was a significant rise in airfares, marking the largest increase for July since the methodology for collecting airfare data shifted from quarterly to monthly in 2001. This surge was likely influenced by the timing of this year’s school holidays”.
Petrol and diesel prices also contributed, with an uptick observed this July, contrasting with a decline for the same period last year. The effect of food price inflation remains persistent, with noticeable increases in staples such as fresh juice and chocolate.
July’s inflation print marks the fourth consecutive month in which CPI has surpassed market forecasts, presenting a challenge for policymakers. The data follows the Bank of England’s recent and somewhat controversial decision to cut interest rates, a move made in the context of ongoing economic uncertainty.
These latest figures narrow the Bank’s scope for accommodative action, raising questions about the path of interest rates in the months ahead.
