stats - Economics Help

UK Inflation Rate 2026

22 January 202615 January 2026 by Tejvan Pettinger

Current UK Inflation Rate 3.4%

Current Inflation Rate CPI 3.4% CPI – D7G7 at ONS (Dec 25, updated 22 Jan 2026
Source: Raw data General inflation tables | CPI annual % change D7G7 at ONS

Other measures of inflation

(CPIH) CPI including owner occupiers’ housing costs – 3.5% (CPIH – L550)
Core CPIH (CPIH excluding energy, food, alcohol and tobacco) rose by 3.6%
RPI – 4.2%
General inflation tables
See: Measures of inflation

Inflation Forecasts 2026?

Inflation is forecast to fall to around 2.5% by the Bank of England. This is due to:

Weak economic growth
Falling cost-push inflation factors
Big energy price rises are moving out of 12 month index
Return of low inflationary pressures that we saw in the 2010s – weak growth.
Global inflation is generally low because of weak demand and low oil prices

Price Level and Inflation

Another way of understanding inflation, is to look at price level. WHen inflation is 10%, the price level rises 10% over 12 months. When inflation falls to 2%, the price level is rising at just 2%.

So even when inflation comes down, households are facing permanently higher prices.

Reasons for low inflation in the UK 2009 until 2021

Low worldwide inflationary expectations. Europe is experiencing very low rates of inflation.
Fall in global inflation rates since 2007.
Reduced consumer spending due to Covid downturn
Weaker commodity price growth.

Reasons for Surge in inflation during 2022/23

Rising oil/gas prices
Ukraine war disrupting gas/energy and food supplies.
Lingering supply side issues from Covid lockdowns and impact on price of shipping.
Excess demand at the end of Covid as households spend savings when economy opens up.

Inflation Calculator – How Inflation Erodes the Value of Money

UK Inflation Calculator

Convert an amount from one year to another (1800–2025)

Amount (£)

From year To year

Based on annual UK inflation (CPI-style) 1800–2025. Results are approximate.

With this calculator, you can see how £830 in 1950, would be worth £40,096.51 in 2025. In other words, inflation reduces the value of money.

Inflation trends in the UK

1970s Inflation

The 1970s frequently saw double-digit inflation. This was due

Cost-push factors - rapid rise in oil prices
Rising wages due to powerful trade unions trying to keep up with living costs.
Lack of independent monetary policy
Inflation expectations rose

Late 1980s inflation

The inflation of the late 1980s was due to

Rapid economic growth 'The Lawson Boom' - growth was above the trend rate causing supply shortages
Rise in house prices fuelling wealth effect
Lack of independent monetary policy. The policy was partly set by 'shadowing the D-Mark' which led to loose monetary policy in late 1980s

Inflation and wages

Real wages = nominal wages - inflation.
Usually, during a period of economic growth - wage growth is higher than inflation, this leads to positive real wage growth.
During the economic recession of 2009-13 - we had a prolonged period of negative real wage growth. Wages rising at a slower rate than inflation.
The end of 2014 saw the first signs of renewed wage growth and positive real wage growth.

Between 2008 and 2023, there has been an unusual period where we have often had negative real wage inflation. (inflation higher than wage growth)

See more at UK wage growth

Inflation and Interest Rates

The Bank of England are responsible for monetary policy. They target an inflation rate of CPI = 2% +/-1. They also take into account economic growth.

Usually, with an inflation rate above 2%, you would expect the Bank of England to increase base rates to reduce inflationary pressures. However, since early 2009, the Bank of England kept base rates close to 0.5%. This is because the Bank of England are worried about the depth of the recession. They argued that the increase in inflation (e.g. during 2011) was due to temporary cost-push factors, such as taxes, commodity prices and effects of devaluation. Therefore, they tolerated CPI inflation above target rather than risk a deeper recession.

CPI and RPI

RPI is still published by the ONS, but it is no longer designated as a national statistic.

RPI includes more items, such as housing and mortgage interest rate costs. It is calculated in a different way to CPIH. See: Definitions of CPI, RPI, RPIX

The ONS also publishes a new measure RPIJ - which involves a new method of calculating RPI

Producer inflation

The producer price index measures the price of manufactured goods as they leave the factory gate.

There is also an input price index which measures cost of raw materials. These are both a guide to future inflationary pressures.

See more at: Input and producer prices

Investment in UK – Business and Public Sector

6 January 202620 December 2025 by Tejvan Pettinger

UK investment since 1997.
The credit crunch 2007-2010 led to big reduction.
Brexit vote in 2016 also saw a decline in growth compared to previous trend.
Covid saw another decline, which the UK has struggled to get out of the low growth.
Source: ONS NPEN

UK Investment compared

UK has the lowest share of investment compared to other G7 countries.

Total UK Business investment since 1997. After sharp fall in 2009 due to global recession, investment recovered quite strongly. In 2016, Investment fell, at least in part, due to the uncertainty of the Brexit vote and leaving the Single Market. The covid pandemic caused another sharp fall in investment.

Effect of Lower investment

The poor investment performance is concerning for the UK economy as it is reflected in poor productivity growth, low economic growth and limited real wage growth

UK real GDP has never recovered its pre-2007 trend rate of growth.

The poor levels of investment post 2008 are reflected in poor labour productivity growth.

Investment in profile

From 2007 to 2010 we see a 22% fall in private sector business investment. This was the result of

Banking crisis – banks didn’t want to lend
Fall in consumer confidence
Recession, which caused firms to hold bank from investment

Recovery in business investment 2010-2016

From a low basis and 20% fall
Helped by low interest rates making investment more attractive, but availability of funds a bigger problem than the cost of borrowing.
Business investment has fallen behind past trend growth in value of business investment.
Still volatile and uncertain, e.g falls in 2014 and the end of 2015

Factors influencing future investment levels

Interest rates. Lower rates make it cheaper to borrow. But, the low rates of the 2010s didn’t help because firms lacked the confidence to invest.
Prospects for economic growth. A key factor is expected future demand, firms will only invest if they expect demand to rise.
Inflation rate – high inflation tends to discourage investment
Trade uncertainties. Uncertainties over Britain’s place in Europe and concerns about US tariff policy.
Demographics – ageing population is not good for investment as old people tend to spend less.

UK Balance of Payments

10 December 20256 December 2025 by Tejvan Pettinger

The balance of payments is the record of a country’s transactions / trade with the rest of the world. The balance of payments consists of:

Current Account (trade in goods, services + investment incomes + transfers)
Capital Account / Financial Account (capital and financial flows, net investment, portfolio investment)
Errors and omissions. It is hard to collect all data so some is missed out.

UK Current Account

The UK has had a persistent current account deficit in the past 25 years. This is caused largely by the deficit in trade in goods, and recently a deterioration in investment incomes.

The underlying UK current account deficit, excluding precious metals, widened to £23.8 billion or 3.2% of gross domestic product (GDP), in Quarter 2 2025
In 2024, the current account deficit for whole year was £63.2 billion, or 2.2% of gross domestic product (GDP) in 2024
In 2024, the financial account recorded a net inflow of £64.1 billion (2.2% of GDP) in 2024.
The UK has had a persistent current account deficit in recent years.

Source: ONS Balance of Payments | Current account as % of GDP

What does it mean to have current account deficit/Financial account surplus?

A simplistic explanation.

The UK buys electronic goods from China (imports). So UK has deficit on current account.
China uses this foreign exchange currency to purchase UK assets (e.g. Government gilts or buy factories). This is a financial surplus as money comes back to UK. (though China has more ownership of UK assets)

Components of Current account

Trade in goods
Trade in services
Primary income (e.g. UK earnings from direct investment, shares, debt, bonds)
Secondary income (e.g. General government transfers, e.g. payments to UN)

Components of UK current account 2025

This shows that the UK had

A deficit in overall trade
- Surplus in trade in services (e.g. insurance, financial services
- Net goods trade deficit (UK importing more goods than it is exporting)
Primary income deficit.
- Wages. For example, if UK companies pay UK workers abroad, this leads to money leaving the UK and is a debit on the current account. Currently, outflows to UK workers abroad are greater than inflows to foreign workers in UK.
- Investment incomes. This is income received on direct investment. A deficit implies that the return on investment in the UK by foreign companies is greater than investment abroad. This reflects a better rate of return on UK investment, with profit from inward investment being sent back to country of origin.
Secondary income Deficit. Transfers, e.g. funds to EU, UN.

How does UK compare to other countries?

Countries like China, Japan and Germany have a current account surplus
UK and US have a current account deficit

UK current account deficit from mid 1980s

Since the mid 1980s, the UK has generally had a persistent current account deficit. Essentially, the UK has been importing more goods and services than it has been exporting.

source: – balance of payments data selector ONS | balance of payments

UK Housing Market

4 December 20253 December 2025 by Tejvan Pettinger

Latest UK housing market stats and graphs. Including house prices, Price to income ratios and construction of new housing.

Economic Growth UK

24 November 202517 November 2025 by Tejvan Pettinger

Economic growth measures the change in real GDP (national income adjusted for inflation; ONS call it chained volume measure of GDP) The rate of economic growth is the % change in real GDP. Between 1945 to 2008, the UK economy grew on average by around 2.5% a year. Since the financial crisis (2007- ) the …

Bond Yields Explained

22 December 20255 March 2025 by Tejvan Pettinger

UK bond yields are the rate of interest received by those holding Government bonds.
Governments sell bonds (also called gilts) via the Debt Management Office to fund their budget deficits. Bonds are a way for the government to borrow – a bit like the government taking out a loan.
Government bonds are frequently traded on bond markets. Therefore, their market price may be quite different to the original price set by the government.

Example of why bond yield changes

A government may sell a 10-year, £1,000 bond at 5% interest. This means every year the government will pay £50 to the holder of this bond.

If demand for government bonds rose, this £1,000 bond would increase in price as investors pushed up the market price.
But, the government still pay £50 a year interest until maturity. If the market price of the bond rises to say £2,000, the interest rate (yield) is now 2.5% (50/2,000)
Therefore higher demand for bonds leads to lower bond yields.
Conversely, if people sell bonds, this pushes up the bond yield (e.g. what happened in UK September 2022)

How a change in price of a bond changes the effective yield

The law of the bond market

As bond value rises, interest yield falls
As bond value falls, interest yield rises

Video summary

Recent UK Bond Yields

Source: Bank of England – 10-year bond yields

Savings ratio UK

5 April 202210 March 2022 by Tejvan Pettinger

Definition of Household savings ratio: The percentage of disposable income that is saved. (1)

Total savings = Disposable income – Household consumption

UK Saving Ratio

Latest UK household savings ratio: 2021 = 10% But, by 2021 Q4 the saving ratio had fallen to 6.2%
By contrast, the average savings ratio in the past 54 years is 9.2% of disposable income.

Rise in savings during Covid Pandemic

2020/21 saw a spike in the savings ratio due to the unusual circumstances of the Covid Pandemic. With normal economic activity curtailed many households were unable to spend on usual items like holidays, leisure and going out. Therefore, household savings rose sharply. With the end of covid lockdowns, the savings ratio fell. The forecast for savings in 2022 and 2023 is for savings to fall sharply due to the cost of living crisis, with many households seeing a fall in real income. This will cause households to run down savings to meet the rising cost of fuel and energy.

UK Saving ratio. Source: National income accounts NRJS dataset

NRJS = Households + NPISH (Non-Profit Institutions Serving Households)

Low saving ratio 2017-2019

This period saw a significant fall in the UK savings ratio to a record low. This fall in the savings ratio has been caused by

Fall in real wages
Depreciation in Sterling post-Brexit – pushing up the cost of living and contributing to falling in real wages
To maintain spending, consumers have borrowed and dipped into savings
Temporary factors (high tax payments on dividends)

Saving ratio and base interest rates

In theory, lower interest rates reduce the incentive to save. But, the interest rate is only one of many factors influencing decisions to save. The most important factor is the state of the economy. In 2009, we saw a rapid rise in the saving rate because of the recession – despite interest rates cut to zero.

Finding economic stats and data at ONS and Bank of England

18 November 201727 April 2013 by Tejvan Pettinger

Quick links for main economic statistics

My page with graphs	Main ONS dataset	Useful direct links
Economic growth	National income acc	Real GDP \| % quarterly
Inflation	inflation series	CPI annual %
Unemployment	Labour market	ILO %
Current account b of p	pnbp	C.A % GDP
Budget deficit	psf at ONS \| psf at HM T	PSNB % GDP
Public sector debt	psf at ONS	PSND % GDP
Labour productivity	prdy dataset	lab. prod. % change
Saving Ratio	Nat.l inc. acc: J3	household savings %
Business investment	Business investment
Housing market	Nationwide data	house price index ONS
UK wage growth	average earnings	S.A % change
Industrial + manuf output	industrial production	index of output

Bank of England data

UK Bond yields	Bank of England 10 year bond yields
Exchange rates	Sterling exchange rate
Money supply	(BM4 at B of E)

Other data

EU Unemployment rate | ECB

Readers Questions: I’m pretty good at finding data at FRED. But I have no luck finding what I want at ONS. Do you have a post on that? Or some guidelines that might help me? Would be great!

It’s a good question. I’ve spent the past four years finding my way around the ONS database and website (and updating links the last time they changed URLs). I’ve spent many hours looking for certain statistics. The good news is that nearly all the important ones are there, if you dig hard enough. Though some data like exchange rates, bond yields, interest rates and money supply you will need Bank of England database.

Sometimes it’s frustrating because all you want is the % change in real GDP, and you have to wade through statistics on S.A Output in fishing and forestry.

A few points.

If you get stuck, ONS have been very helpful in pointing out to me the relevant page. So it might be worth using the contact page, if you do get stuck
Sometimes, the hardest thing is knowing where to find a statistic. For example, finding the savings ratio was difficult, because it’s not intuitive you need to look in National accounts – Household sector – saving ratio
In some cases, other sources of data are better, e.g. for housing I still think Nationwide is better than the ONS, though the ONS seem to be giving housing more importance.
It’s also worth checking out:

OECD,
IMF,
World Bank,
ECB stats

Tips on getting data

I subscribe to the ONS RSS feed so I can see when new publications come out.

e.g. public finances March 2013
e.g. GDP Q1 2013