The UK inflation figure was 3.8% for the 12 months to August 2025, unchanged from July, according to the latest figures from the Office for National Statistics (ONS).
Market watchers had been expecting an increase for August which would likely be repeated in September hitting a peak of 4%.
Commenting on the latest figures and what this might mean for homeowners and borrowers Livemore managing director of capital markets and finance Simon Webb, said: “With the market widely expecting inflation to rise, today’s figures will be seen as a surprising but positive development.
“While it’s unlikely the Bank of England will respond immediately and cut rates tomorrow, steady progress towards the target of 2% inflation could create the space for rate cuts later in the year.
Just Mortgages and Spicerhaart chief executive John Phillips commented that while an unchanged inflation rate was positive news: “I still don’t think I’d be planning a rate cutting party for tomorrow. But what it could mean is far better odds for a change in November which had recently seemed off the cards.
He added that despite the economy flatlining in July, inflation was still proving particularly stubborn, along with pretty fierce headwinds caused by both global and domestic pressures.
“Nonetheless, we have seen a good start to September with positive activity across all areas of our business – whether that’s buyer registrations, valuation requests or mortgage appointments. It shows that despite the pressures households are facing, there is still appetite to push on with plans to buy or sell.”
L&C Mortgages associate director David Hollingworth said the new inflation data was unlikely to push any significant shift in market rates that could affect mortgage borrowers.“It won’t move the dial on what we can expect from tomorrow’s base rate decision, where a hold will be odds-on favourite.”
He added that mortgage borrowers could well be steeling themselves for another helping of cautious tone and the message that base rate will not fall until a sustainable path for inflation seemed clear.
“It’s anticipated that inflation could nudge higher before it eases, so borrowers will have to wait for signs of improvement before they can hope for another interest rate cut.”
ASK chief executive and co-founder Daniel Austin said unchanged UK inflation still pointed to a bumpy and uncertain road ahead.
“Policymakers are caught between volatile global conditions, exacerbated by ongoing uncertainty, and shifting domestic policy. Markets still expect another rate cut before year-end, but with the Autumn Budget looming, the MPC is likely to hold fire until there’s clarity on the Chancellor’s fiscal plans. A premature move would be a leap of faith.”
“For homeowners and buyers, the hope of lower borrowing costs lingers, yet persistently elevated fixed mortgage rates mean relief is not imminent. With inflation unlikely to return to the 2% target this year, mortgage pressures look set to persist.”
