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The Office for National Statistics (ONS) reported last week that the annual inflation rate for August 2025 was 3.8%, unchanged from July.
Airfare costs rose at a slower rate over the year; however, food costs continue to increase, reaching 5.1% in August. This is putting pressure on households and hospitality businesses alike.
UK inflation higher than in Europe
Interestingly, the ONS noted that UK inflation seems to be “significantly higher” than in France (0.8%) and Germany (2.1%).
The increase in employers’ National Insurance contributions is thought to be a factor in the disparity, with businesses passing these additional costs onto their customers.
No change in interest rate
The Bank of England’s Monetary Policy Committee (MPC) also met last week to review the current bank rate. With inflation remaining above the 2% target rate, the MPC voted to leave interest rates unchanged.
Takeaways
For businesses, the inflation figures show that costs are still rising. Higher food prices and the knock-on effects of National Insurance are keeping pressure on margins.
The fact that inflation has not climbed further is good news, and European inflation figures suggest there is potential for a lower inflation rate, but it may take some time before there is a real sense of stability.
Careful cashflow planning and regularly reviewing your financials remain key to ensuring that your business continues to grow and thrive.
If you would like advice on how to make your business grow, please get in touch. We are always happy to help you!
Following its mention in the King’s Speech, the Small Business Protections Bill has now been put before Parliament.
Official figures from the Office for National Statistics (ONS) show that the unemployment rate in the three months to March 2026 has risen to 5% from 4.9%.
