UK inflation has held steady at 3.8% for three consecutive months, exceeding expectations. The Bank of Thailand expects interest rates to remain steady until 2026.

UK inflation has held steady at 3.8% for three consecutive months, exceeding expectations. The Bank of Thailand expects interest rates to remain steady until 2026. Economists warn that inflation could become ingrained in the economy due to high wages.

On October 22, 2025 at 7:53 a.m., CNBC reported that The UK annual inflation rate in September was 3.8%, the same as the previous month. This goes against the forecasts of economists and the Bank of England (BOE), who estimated that inflation was likely to peak in that month.

Office for National Statistics (ONS) revealed that The country's inflation rate remained unchanged for the third consecutive month, with the BOE previously expecting the consumer price index (CPI) to peak at 4% in September, more than double the central bank's inflation target, before starting to decline next year.

Core inflation, which excludes energy, food, alcohol and tobacco prices, rose 3.5% year-on-year, down slightly from 3.6% in August.

Grant Fitzner, Chief Economist at the ONS He said that price movements across multiple categories resulted in overall inflation remaining flat in September, driven primarily by lower-than-year declines in fuel and airfares. However, pressure was also exerted by lower prices for leisure and cultural goods, including live entertainment. Meanwhile, prices for food and non-alcoholic beverages fell for the first time since May last year.

The report is the final inflation data release before the Bank of England's policy meeting on November 6th, with analysts predicting the Bank will hold off on cutting interest rates from 4% as inflation remains high, despite the economy expanding only slightly at 0.1% per month in August.

George Brown, Senior Economist at Schroders specify that "Inflation hovering near 4% should serve as a warning signal to markets that still expect the central bank to cut interest rates two more times next year.” With a warning that High inflation could be entrenched in the UK economy due to disappointing productivity growth and still-high wages, he said, adding that he expects the BOE to hold rates steady until the end of 2569 and is not ruling out a potential next rate hike instead of a cut.

The BoE's Monetary Policy Committee (MPC) is also expected to remain cautious ahead of the November 26 Autumn Budget, when Treasury Secretary Rachel Reeves is expected to announce tax hikes and government spending cuts to help ease inflationary pressures. Reeves has also signaled targeted measures to ease the cost of living, and there is speculation that a cut in the Value Added Tax (VAT) on energy could help reduce household costs and curb price pressures.

Sanjay Raja, Chief UK Economist at Deutsche Bank said “Budget measures to reduce inflationary pressures are gaining more support.” along with stating that The Bank will closely monitor adjustments to the VAT and fuel tax, as they could have a significant impact on the short-term inflation outlook.

Deutsche Bank expects CPI to fall to 3.4% this year, before slowing further to 2.6% in 2569 and reaching the BOE's 2% target in 2570.

refer : www.cnbc.com

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