The UK Consumer Prices Index (CPI) rose by 3.8% in the 12 months to July 2025, up from 3.6% in the 12 months to June and hotter than anticipated. The UK Office of National Statistics reports that transport, particularly air travel, helped to drive CPI higher.
Core CPIH (CPIH excluding energy, food, alcohol, and tobacco) rose by 4.2% in the 12 months to July 2025, down slightly from 4.3% in the 12 months to June.
CIPH is the Consumer Prices Index, including owner-occupiers’ housing costs.
The higher number may put pressure on the Bank of England in its decision to hold or lower benchmark rates.
Scott Dawson, CEO of DECTA UK, stated that the increase in UK inflation is a significant concern, adding pressure on the Bank of England to accelerate the pace of rate cuts.
“The Bank of England has already raised its inflation forecast for the year and is predicting a peak of 4% in September,” said Dawson. “For Fintechs, this economic environment could mean a shift in investment strategy. In a post-cheap-credit era, venture capital is tightening, leading to a new focus on resilience over reckless risk. This means investors may favour innovations with a clear purpose and practical application over novelty for its own sake. Innovation for the sake of innovation, detached from purpose or regulation, often leads nowhere.”
Dawson added that rising costs, including higher taxes and minimum wage increases, are impacting smaller businesses, forcing them to raise prices, which will be passed on to consumers. He worries that this will further erode customer goodwill, calling the environment a “rot economy.”
