KPMG UK has recently commented and shared key insights on the newly released inflation data. Yael Selfin, Chief Economist at KPMG UK said that slowing inflation strengthens the case for a potential December 2025 interest rate cut,
Selfin added that the latest data is seemingly positive for the Bank of England, with both headline and underlying inflation easing.
With further progress on disinflation and “softer signals from the labor market, a final rate cut is expected at the December meeting.”
Selfin also mentioned that upside risks to the inflation outlook stemming from the upcoming Budget have “receded, with growing indications that the Chancellor will look to plug the fiscal gap through higher taxes on households.”
On balance, they now expect these taxes to “slow domestic demand, which should support continued downward momentum for inflation over the coming year.”
As noted in the update from KPMG:
“Headline inflation eased to 3.6% in October, down from 3.8%, driven by lower households energy prices. Although household energy bills rose on a quarterly basis, last quarter’s sharp increase dropped out of the annual comparison, pushing down headline inflation. Looking ahead, inflation is expected to ease gradually over the coming months, with a return to target projected by mid‑2026.”
Karim Haji, Global and UK Head of Financial Services at KPMG, has also commented on the Money and Credit statistical release from the Bank of England (for September):
“While mortgage approvals appear to have strengthened, signalling a modest resurgence of activity in the housing market, remortgaging and consumer borrowing have pulled back. The decline in borrowing suggests that many households remain cautious and are prioritising repayment or savings over new borrowing. It also highlights a central tension for lenders: while some segments are beginning to act on housing opportunities, others are still under pressure from rising bills, inflation and the energy price cap increase.
Haji continued:
“With the Autumn Budget approaching and continued speculation surrounding tax and support changes, lenders must engage early with customers at risk, revisit affordability models and ensure support channels are well prepared for any shift in household resilience.”