This morning has brought some better news for the UK on the inflation front.
The Consumer Prices Index (CPI) rose by 3.6% in the 12 months to October 2025, down from 3.8% in September.
So an improvement although a nuanced one if one moves onto the monthly figure.
On a monthly basis, CPI rose by 0.4% in October 2025, compared with a rise of 0.6% in October 2024.
As you can see that would in fact leave us with an even higher annual inflation rate if it was sustained over a year, It also leaves me with the feeling that things are less bad rather than outright improving so let us look further.
October Inflation
The issue of food price inflation has in fact got worse.
On a monthly basis, food and non-alcoholic beverages prices rose by 0.5% in October 2025, compared with a rise of 0.1% a year ago.
The monthly surge raised the annual rate as well.
The 12-month inflation rate for food and non-alcoholic beverages was 4.9% in October 2025, up from 4.5% in September.
I have looked further and bread and cereals were in the van rising by 1.2% on a monthly basis.
Prices overall rose this year but were little changed a year ago, with the main contributions coming from sugar/chocolate coated breakfast cereal. This was however partially offset by a downward contribution coming from packs of individual cakes.
That takes me back to my childhood as I used to love those Kellogg’s variety packs. Next was vegetables which rose by 0.8%.
Prices overall rose this year by more than a year ago, with the main contributions coming from potato crisps.
Not sure they should be under vegetables. Made from one yes but,…
Oils and fats rose by 0.7% and presumably contributed to the rise in the price of potato crisps, There were no declines and the slowest rate of growth was from fruit at 0.2%.
Clothing and Footwear
Sadly our official statisticians overlooked this area but it rose by 1% on the month so I looked further.
This was however partially offset by an upward contribution coming from women’s casual outer jackets…..Prices overall rose this year but were little changed a year ago, with the main contributions coming from lady’s scarves.
As you can see it was a bad month for women because as far as we can tell the price rises were for them. The reason the detail is lacking is that the Office for National Statistics looks at annual changes and thus misses monthly rises which are similar to last year.
Education
There was a large rise here of 3.6% in October meaning the annual rate is now 7.6%. But sadly the Office for National Statistics ignores this in its analysis so my guess is that student fees rose. Although on reflection is this VAT on private-school fees?
Housing and Household Services
If you were wondering when the change in domestic fuel bills would arrive here it is.
The easing in the 12-month rate between September and October 2025 mainly reflected a downward effect from gas, where prices rose by 2.1% in the 12 months to October 2025, compared with a rise of 13.0% in September 2025. Monthly gas prices rose by 0.9%, compared with a rise of 11.7% a year ago. Monthly electricity prices rose by 2.4% compared with a rise of 7.7% a year ago.
At this point we have the change in the annual inflation rate and in fact if you do the maths more than it as the change explains a 0.23% move.
Restaurants and Hotels
We may be seeing an unwinding of the Taylor Swift and Beyonce effect here.
On a monthly basis, prices were little changed in October 2025, compared with a rise of 0.2% a year ago.
The largest downward effect came from accommodation services where monthly prices fell by 2.2%, compared with a fall of 0.2% a year ago.
The Cost of Living or RPI
We are reminded again as to why this was replaced by the CPI measure as it again gives a higher reading.
“The all items RPI annual rate is 4.3%, down from 4.5% last month.”
It rose by 0.3% on a monthly basis driven by the factors we have discussed above.
But for once we saw some specific downwards influences.
The monthly price change for a property in the UK was-0.6%
So house prices fell in September leading to this.
Other housing components, which decreased the RPI 12-month rate by 0.04 percentage points between September and October 2025, with the effect mainly from house depreciation.
The use of “Other housing components” for the effect of house prices shows the ideological mess the Office for National Statistics is in.
The mortgage rate was pretty much unchanged ( up -.0,01%). The figure without it is below.
The annual rate for RPIX, the all items RPI excluding mortgage interest payments (MIPs), is 4.2%, down from 4.4% last month.
Problems created by Rents and the ideology of Imputed Rents
The casual observer might assume that housing costs would be some combination of house prices.mortgages and rents as appropriate. In the RPI that is how things work. But the powers that be decided to use Imputed Rents for owner-occupiers and have caused quite a crisis.
You see measuring rents has proven to be quite a problem and if you look back in time one I predicted. I have put a link below covering the discontinuity that was created in the figures.
My campaign that official UK Rental Inflation figures have been too low gets an official confession
But less than 2 years later we are back in trouble again. Let me illustrate via today’s release.
Average UK monthly private rents increased by 5.0%, to £1,360, in the 12 months to October 2025 (provisional estimate); this annual growth rate is down from 5.5% in the 12 months to September 2025.
So officially it has fallen to 5%. But you see they use a 14 month stock or “bath” as they call it meaning they are 18 months out of date in practice. So these numbers are in reality from the summer of 2024. This really matters if Goodlord are right about the actual situation.
The latest Rental Index from Goodlord found that that rents in England dropped in October, with prices down by -11.79% compared to September figures. Year-on-year, rents are up by 3.05%, and void periods rose to 21 days.
There is more here.
Throughout 2025 to date, these figures have been fairly steadily reducing each month. However, the slight increase from 2% in September to 3% in October could indicate that we’re going into the quietest season for the market with a little more heat than usual. The year-on-year change is the metric to watch over the winter.”
This is rather devastating for the ONS because their “frightfully clever” machinations mean that not only have they got the annual rate of inflation wrong they have the direction of travel wrong too as up is the new down,
Now if you put the wrong rental figures into an Imputed Rent driven measure imagine the mess.
However, the OOH costs component accounts for approximately 17% of the CPIH and is the main driver for differences between the CPIH and CPI inflation rates. This makes CPIH our most comprehensive measure of inflation.
They have multiplied the errors above by making rents nearly a quarter of their “most comprehensive measure of inflation.”
Comment
As you can see whilst the fall in the annual inflation rate is welcome the monthly figures make one more sanguine as for example food price inflation continues and has in fact picked up. The mess that I have described above in the official rental series is another problem.
Let me finish on a positive note as we have producer price figures again and let us cross our fingers for more months like October.
On a monthly basis, producer input prices fell by 0.3% and producer output (factory gate) prices showed no movement in October 2025.
