Skip to main content
Search

Inflation proves stubborn keeping pressure on the Bank of England

Date: 17 September 2025

2 minute read

17 September 2025

If you are covering the latest inflation data, please see the following comment from Lindsay James, investment strategist at Quilter: 
 

“UK inflation held steady at 3.8%  in August, the same as July. Core inflation registered 3.6%, while services inflation slowed to 4.7%, compared with 5.0% in July, highlighting the persistence of domestic price pressures. Food inflation eased modestly to 5.1%, having been 4.9% last month, but grocery prices remain elevated, echoing recent data showing only a gradual slowdown.

 
This outcome broadly confirms forecasts that inflation would hover around 4% through the autumn, with expectations for a slow descent beyond that, potentially not hitting 2% until 2027. With regular wage growth running at 4.8%, the risk is that services inflation continues to prove stubborn, making the Bank of England wary of cutting rates prematurely. While pay growth has slowed a touch from earlier in the year, it remains strong enough to fuel inflationary pressures, and real pay gains are still only marginal.

 For the wider economy, today’s figures underline the higher-for-longer interest rate environment. That will keep pressure on households already contending with elevated living costs and on businesses facing squeezed demand. Growth risks remain tilted to the downside in the second half of the year, and the labour market could soften further if wage pressures collide with slower activity.
 For government, stubborn inflation complicates the fiscal outlook. Elevated benefits indexation and higher debt interest payments from the UK’s large stock of index-linked gilts mean the Chancellor will have even less room for manoeuvre when she delivers the budget at the end of November. That reality will shape how Labour balances fiscal credibility with its policy ambitions. For investors, the key takeaway is not a resurgence of runaway inflation, but a plateau that delays relief and keeps yields and borrowing costs elevated for longer.

Alex Berry

External Communications Manager
+44 (0)7741 151931

Notes to Editors

Notes to Editors:

About Quilter plc

Quilter plc is a leading wealth management business, helping to create brighter financial futures for every generation.

Quilter plc oversees £157.4 billion in customer investments (as at 30 June 2026).

It has an adviser and customer offering spanning financial advice, investment platforms, multi-asset investment solutions and discretionary fund management.

The business is comprised of two branded segments: Quilter and Quilter Cheviot.

Quilter encompasses the financial advice network and national, Quilter's investment platform and multi-asset solutions and Quilter Invest, the digital savings and investment app.

Quilter Cheviot is a discretionary fund management and financial planning business.

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Senator House, 85 Queen Victoria Street, London, EC4V 4AB, United Kingdom. Registered number: 6404270.  Registered in England.

PRIVACY INFORMATION
We hold your name, email address, job role and the name of your publication on our Press Distribution List and use this information to send you press releases which we believe will be of interest to you. You can stop receiving emails from us at any time by emailing us at: pressoffice@quilter.com and asking us to remove you from the Distribution List.

Related Articles

Tax receipts provide little Christmas cheer for households but IHT tax take does slow

3 minute read

If you are covering the latest HMRC tax receipts data, please see the following comment from Shaun Moore, tax and financial planning expert at Quilter:

Published 19 December 2025

BoE given cover to deliver Christmas rate cut as inflation falls more than expected

2 minute read

If you are covering the latest inflation figures from the Office for National Statistics, please find below a comment from Lindsay James, investment strategist at Quilter:

Published 17 December 2025