UK Inflation Rate Drops to 3.6% in October, Raising Hopes for December Rate Cut
London, Wednesday, 19 November 2025.
The UK’s inflation rate fell to 3.6% in October, sparking expectations of a Bank of England rate cut in December, as core inflation also dipped, potentially impacting global economic trends.
Current Inflation Trends
The UK inflation rate decreased to 3.6% in October 2025 from 3.8% in September, according to the Office for National Statistics (ONS) [1][2]. This marks the first decline in five months and aligns with economists’ expectations [1]. The reduction was largely driven by lower increases in gas and electricity prices, influenced by changes in the Ofgem energy price cap [1].
Core Inflation and Economic Implications
Core inflation, which excludes food, energy, alcohol, and tobacco, also saw a reduction to 3.4% in October from 3.5% in September [1][2]. This easing of core inflation strengthens the possibility of a Bank of England interest rate cut in December 2025, with markets pricing an 80% chance of a 0.25% reduction [1][3].
Impact on Consumer Spending and Economic Growth
The inflation drop could have significant implications for consumer spending and economic growth. Lower inflation can relieve household financial pressures, possibly boosting spending [2]. However, the overall economic growth in the UK has remained sluggish, with only a 0.1% growth in the third quarter of 2025 [2].
Global Market Reactions and Future Expectations
The UK’s inflation trends and potential interest rate cuts may influence global markets, including the US economy [2]. Analysts are closely watching how the Autumn Budget, to be announced on November 26, 2025, will impact future inflation rates and monetary policy decisions [2]. The Bank of England’s next meeting on December 18, 2025, will be crucial in determining the future path of interest rates [3].