Commenting on today’s data from the Office for National Statistics that showed the annual rate of CPI inflation holding at 3.8% in August 2025, unchanged from July, Anna Leach, Chief Economist at the Institute of Directors, said: “Inflation has stabilised this month, broadly as expected, with rising food and restaurant prices offset by easing seasonal airfare costs. The Bank of England is nearing the end of its rate-cutting cycle, but faces a delicate balancing act: wage growth is softening, yet household inflation expectations are edging up. Households perceive inflation at 4.8% — close to food price inflation at 5.1% and above private-sector pay growth. After years of painful volatility, the priority must be to squeeze inflation decisively out of the system.”

Stuart Morrison, Research Manager at the British Chambers of Commerce, commented: “Businesses will be worried by inflation holding at 3.8% at a time when cost pressures continue to bite, especially on wages. The BCC’s latest economic forecast expects inflation to remain at around this level until the end of the year.

“Firms are clear that April’s rise in national insurance, continued strong wage growth and higher tariffs are all eroding their operating margins. There is also growing concern that sticky inflation will limit the scope for further interest rate cuts.  

“Ahead of the Autumn Budget, our message to the Chancellor is clear – there must be no new tax rises on business. Firms cannot provide the economic growth we all need if they continue to be hampered by rising costs.” 

Martin Sartorius, Principal Economist, CBI, said: “Inflation remained elevated in August, consistent with the Bank of England’s projections. Higher food and energy prices, alongside the passthrough from increased labour costs, are expected to keep price growth firm in the near term.

“The Monetary Policy Committee looks set to keep interest rates unchanged tomorrow and, going forward, the MPC faces a delicate balance between signs of a cooling labour market and the risk of price pressures remaining stubbornly high. Its rate decision in November will likely hinge on whether future data give the MPC confidence that a further cut will not contribute to inflation staying elevated for longer."