UK Inflation falls to 2.8%

There’s been a bigger than expected drop to the latest rate.

Here, we explain everything you need to know about the latest inflation stats and which savings accounts offer inflation-beating rates. 

Some articles on the site contain affiliate links, which provide a small commission to help fund our work. However, they won’t affect the price you pay or our editorial independence. Read more here.

What is the current rate of inflation in the UK?

The current CPI rate of inflation in the UK is 2.8% for February 2025, according to the latest figures from the Office for National Statistics (ONS). It was expected to fall from 3% to 2.9%.

The current rate of core inflation (which removes more volatile products like food and fuel) in the UK is 3.5%, down from 3.7% last month. Services inflation (which has remained higher than the rest for a while now) remained at 5%.

Meanwhile, RPI (still used in some cases such as rail fares, interest on student loans and air passenger duty) in the UK is down to 3.4%. It was 3.6% last month.

Historic inflation rates

The graph below shows how CPI inflation has changed in the UK.


source: tradingeconomics.com

What is inflation?

The main thing to remember is even if the rate of inflation is falling, prices are still going up. They’re just increasing by a slower rate.

Check out our What are inflation and deflation? article to learn more about what price changes count towards inflation, as well as explanations of the different measures including CPI and RPI.

When is the next inflation announcement?

The next inflation announcement will be on 16 April 2025. 

The ONS publishes inflation figures each month and has confirmed the following dates for upcoming announcements : 

  • 16 April 2025
  • 21 May 2025
  • 18 June 2025
  • 16 July 2025
  • 20 August 2025
  • 17 September 2025
  • 22 October 2025
  • 19 November 2025
  • 17 December 2025

What’s changed this month?

Women’s clothes, housing and gig tickets all fell at a slower rate year on year to bring down the overall rate. However alcohol prices increased at a higher rate to offset some of these decreases.

You can see how prices have changed for individual items in this ONS calculator, while this chart shows the annual CPI rates over 12 months for the last three months.

Jan 2025Feb 2025
CPI All items3.02.8
Food and non-alcoholic beverages3.33.3
Alcohol and tobacco4.95.7
Clothing and footwear1.8-0.6
Housing and household services2.11.9
Furniture and household goods0.50.2
Health5.05.1
Transport1.71.8
Communication5.97.3
Recreation and culture3.83.4
Education7.57.5
Restaurants and hotels3.33.4
Miscellaneous goods and services2.83.0
All goods1.00.8
All services5.05.0
CPI exc food, energy, alcohol and tobacco (core CPI)3.73.5
Source: Consumer price inflation from the Office for National Statistics

Will inflation go up or down?

For now, it’s likely to keep increasing. The Bank of England think the rate will go up to 3.75% during this year, driven in part by increases to bills like energy and Council Tax. After that it hopes it’ll stabilise around its 2% target.

What does it mean for the base rate of interest?

Earlier this month, the Bank of England kept the base rate at 4.5%. There’s an expectation we’ll see two cuts in 2025, with the first of these potentially happening in May 2025.

What does it mean for future price increases

October’s inflation rates aren’t linked to any key increases. Here are the main price hikes linked to inflation rates:

  • July RPI – rail fares in March
  • September CPI – benefits including State Pension in April
  • December CPI – student loans in September

Editor’s pick: free share

Get a free share worth up to £100 when you sign up to Trading 212.

What does it mean for savings?

If inflation remains ‘sticky’ and does slow down the base rate cuts, then it’ll mean we see less movement in savings rates.

Do any savings accounts beat inflation?

Despite falling savings rates, we’re still at a place where there are lots of options that beat inflation!

The top-paying savings account is the Principality Building Society Regular Saver which offers 7.5%, though only for six months. It’s worth noting that this is a regular savings account.

You can also earn 6% with the Santander Edge Saver, if you hold a Santander Edge account. If you add direct debits (to earn cashback) on the linked current account there’s a monthly fee for the current account, so keep that in mind when comparing savings rates.

However if you’re looking for accounts without these balance restriction, there are now dozens of easy access and fixed rate savings accounts above the inflation rate.

2 thoughts on “UK Inflation falls to 2.8%

  1. Hi Andy, great summary, very professional. I’m still learning about all of these subjects, so thanks for that!

    Do you know what to expect regarding the interest rate of the savings accounts? Are the banks planning to reduce the interest rate soon based on the reduction in the UK inflation?

  2. Government controlled ONS will produce low incorrect data for September in order to determine next years pension & benefit increases then “amend” the data by December so the government can claim that it is too late to correct next years increases.

Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.