The Office for National Statistics (ONS) confirmed last week that the annual inflation rate for August 2025 stood at 3.8%, the same level recorded in July.


Although airfare costs rose at a slower pace over the year, food prices continued to climb, reaching 5.1% in August. This persistent increase is placing added strain on households as well as hospitality businesses.

UK inflation remains higher than Europe

The ONS highlighted that inflation in the UK appears to be “significantly higher” than in France (0.8%) and Germany (2.1%).
One contributing factor is the rise in employers’ National Insurance contributions, which many businesses have passed on to their customers, fuelling price pressures.

No movement on interest rates

The Bank of England’s Monetary Policy Committee (MPC) met last week to review the base rate. With inflation still above the 2% target, the MPC opted to keep interest rates unchanged.

Key takeaways for businesses

For companies, the figures underline that operating costs remain elevated. Rising food prices and the impact of higher National Insurance contributions continue to squeeze margins.
While it is encouraging that inflation has not increased further, comparisons with European rates suggest there is scope for improvement. However, it may be some time before genuine stability is achieved.

Careful cash flow management and ongoing financial reviews remain essential to ensure your business can grow and prosper despite these challenges.

If you would like tailored guidance on helping your business expand, please do get in touch — we are always happy to support you.

See: https://www.bbc.co.uk/news/articles/cderznjj4r7o