UK Inflation holds at 3.8%

What this means for the November budget 

UK inflation has remained at 3.8% for the third month in a row, according to the latest ONS data (22 October 2025). While the headline number is unchanged, the detail behind it paints a mixed picture for households and for the Government as the Budget approaches.

What’s driving inflation right now 

Different parts of the economy are moving at different speeds:

Food prices still rising faster than average

Items such as meat, dairy and fresh produce continue to increase at a rate above overall inflation. Food inflation has slowed slightly, but it remains a major pressure on budgets.

Energy prices stabilising

Gas and electricity costs are broadly flat compared with a year ago, following sharp declines earlier in 2025. As a result, they are no longer pulling inflation down.

Services inflation remains high

Hospitality, transport and personal services continue to see strong price growth, driven by wage increases and high demand for leisure and travel.

Goods inflation easing

Furniture, appliances and clothing have seen more modest rises, with retailers discounting to support sales as consumer demand softens.

These contrasting forces have effectively cancelled each other out, keeping inflation stuck. Core inflation — which excludes food and energy — is also proving slow to fall, suggesting price pressures are now more rooted in the UK economy.

What this could mean for the November Budget

With inflation higher than expected, the Chancellor faces a more challenging backdrop on 26 November.

• Index-linked costs rise — State pensions, benefits and public sector pay become more expensive when inflation stays high.

• Less fiscal headroom — Higher borrowing (at a five-year high in September) and rising spending commitments leave the Treasury with less room to manoeuvre.

• Increased likelihood of targeted tax measures — To keep the public finances on track, tax rises or changes to allowances may be considered.

Rachel Reeves must balance protecting households from rising living costs with keeping government finances sustainable. With slow economic growth, some form of tax tightening appears possible.

What this means for households

Persistent inflation continues to affect real incomes, savings, and long-term financial plans. The Budget may also bring changes to:

• Personal tax thresholds

• Investment or business allowances

• Pension tax reliefs

Understanding how these changes could affect your financial position is more important than ever.

How Aetas Wealth can help

If you or your family are concerned about the impact of inflation or potential Budget changes, it’s worth talking things through with your Aetas Wealth adviser.

We can help you build a long-term plan that takes inflation, interest rates and future policy changes into account — so decisions are based on strategy, not shifting headlines.