Money Wellness

cost of living

Published 15 Oct 2025

3 min read

Inflation to remain above target - and rising bills are to blame

Inflation in the UK is set to stay stubbornly high for some time, experts have warned.

Inflation to remain above target - and rising bills are to blame
James Glynn - Money Wellness

Written by: James Glynn

Senior financial content writer

Published: 15 October 2025

According to the International Monetary Fund (IMF), prices are set to go up by 3.4% this year and 2.5% in 2026.

This, it said, will be driven by rising energy and utility bills.

The IMF also believes that the UK will have a higher rate of inflation than any other G7 country in 2025 and 2026.

As a result, it doesn’t expect to see the Bank of England cut interest rates in the near future.

It’s not all doom and gloom

Those figures might make depressing reading, but there were some chinks of light in the IMF report.

The organisation believes higher inflation is likely to be temporary, with the figure falling to 2% by the end of next year.

There was also some good economic news, as the IMF predicts the UK will be the second-fastest growing G7 economy.

Inflation currently at 3.8%

At the moment, inflation is at 3.8% - almost double the Bank of England’s target of 2%.

Interest rates, meanwhile, were kept on hold at 4% in September.

The Bank of England has cut interest rates five times since August last year and they’re now at their lowest level for over two years.

But governor Andrew Bailey has said “we are not out of the woods yet” on inflation, so “any future cuts will need to be made gradually and carefully”.

What does all this mean for the Budget?

Chancellor Rachel Reeves is set to deliver her Budget on 26 November, so what does this mean for her as she tries to deal with the country’s economic challenges.

Speaking to Sky News, she said: “Of course, we're looking at tax and spending as well.”

That’s as close as she’s come to hinting that both tax rises and spending cuts could be on the way.

However, she has insisted that she will make sure that “the numbers will always add up”.

We've rounded up some of the speculation and things to look out for in the Budget, and we'll be here on the day to let you what's been announced and what it means for you.

Help is available

If you’re struggling to keep up with your regular expenses, there are practical steps you can take.

Find out what benefits you could get

You might be entitled to financial support from the government, so use our benefits calculator to see what you can claim.

Create a household budget

Look at how much money you have coming in and where it’s going.

You’ll then be able to work out where you can make up savings and free up cash for essential costs, such as rent, mortgage payments and bills.

Check our guide on how to create a budget to get started.

Tackle problem debts

If you’re dealing with debt, then get in touch for confidential, practical and impartial debt advice, and we can discuss what options are open to you.

James Glynn - Money Wellness

Written by: James Glynn

Senior financial content writer

James has spent almost 20 years writing news articles, guides and features, with a strong focus on the legal and financial services sectors.

Published: 15 October 2025

The information in this post was correct at the time of publishing. Please check when it was written, as information can go out of date over time.

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James Glynn - Money Wellness

Written by: James Glynn

Senior financial content writer

Published: 15 October 2025

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