Persistent High Inflation Levels Persist
In a recent development, the National Institute of Economic and Social Research (NIESR) has revealed that the largest contributors to price increases compared to last year are housing costs, energy costs, water bills, food prices, and catering services. Specifically, housing costs have risen by 4.4%, energy costs by 9.3%, water bills by 26%, food prices by 3.8%, and catering services by 4.2%.
These findings are exclusive to corporate members, NiGEM subscribers, and NIESR partners. It's important to note that, at present, there is no specific information available about my connection with a bank related to the NIESR.
The Monetary Policy Committee (MPC) is anticipated to keep interest rates on hold this Thursday, as price pressures from higher labour costs, elevated inflation expectations, and upside risks from food prices persist. The Bank of England may prioritise keeping inflation under control over a faster pace of rate cuts, even if it means slower economic growth and higher government borrowing costs.
Inflation for most items remains moderately stable, but some sectors are experiencing significant price pressures due to increases in administered prices and adverse weather conditions impacting food inflation. The Office for National Statistics (ONS) released figures showing that inflation remained unchanged at 3.8% in August 2025. However, the Bank of England's target for inflation is not being met, as the forecasted average for the next 6 months is 3.4%.
For those interested in understanding more about inflation and its calculation, I invite you to read our blog post here.
As an Associate Economist at NIESR, I will continue to monitor the economic landscape and provide insights on the current state of inflation and its impact on various sectors. Stay tuned for more updates.
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