UK inflation cooled to 3.6% year-on-year in November 2025, according to the latest Consumer Prices Index (CPI) data from the Office for National Statistics, marking a continued downward trend from highs above 4% seen in recent months. The monthly figure showed a slight decline of 0.1%, indicating seasonal deflationary pressures during the period. This brings the annual inflation rate to its lowest level since March 2024, following a steady six-month descent from 4.1% in June down to the current 3.6%. Notably, core CPI—which excludes volatile components such as food and energy—also held at 3.6% year-on-year, suggesting underlying price pressures remain entrenched despite the broader slowdown.
The persistence of core inflation at 3.6% signals that domestic demand and service-sector pricing dynamics continue to exert upward pressure on prices, limiting the scope for aggressive monetary easing. Economists note that while headline inflation is trending lower, the stickiness in core measures reflects sustained wage growth and elevated service costs, particularly in housing and hospitality. The Bank of England has previously emphasized the importance of monitoring core CPI when assessing the appropriate path for interest rates, and the unchanged reading may reinforce a cautious stance in upcoming policy meetings. Market expectations for rate cuts in early 2026 have softened slightly following the report, with analysts revising forecasts to reflect prolonged inflation resilience.
Among key categories, Housing and Household Services saw the largest annual increase at 4.9%, driven by rising electricity and gas tariffs as well as ongoing pressures in private rental markets. Food and Non-alcoholic Beverages inflation remained elevated at 4.2%, reflecting supply chain adjustments and strong grocery pricing power. Transport costs rose 3.7% over the year, supported by higher airfares and fuel prices earlier in the autumn, while Restaurants and Hotels posted a 3.5% increase, underscoring sustained consumer spending in leisure services. Despite the marginal monthly dip, the overall pattern suggests inflation is moderating gradually rather than falling sharply. Policymakers will likely view the data as confirmation that disinflation remains on track, but not yet sufficient to warrant a pivot toward more accommodative monetary policy.