MNI UK Inflation Insight: September 2025

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• Headline CPI was 0.21ppt below the BOE’s forecast at 3.78%Y/Y with food the biggest surprise (the MNI median expectation was 4.0%Y/Y). Softness is also evident in services which came in at 4.69%Y/Y (0.36ppt below the BOE’s forecast). There was a smaller, but still notable 0.2ppt downside surprise for consensus within services.
• We estimate that only around a quarter to a third of this month's softness has strong potential to be reversed in October data.
• Combine this with last week’s softer-than-expected wage data which saw private regular earnings data come in on course to see a 0.3ppt downside surprise for Q3 and we think the prospects of a November cut have increased to around 50/50.
• Market pricing has shifted decisively with 8.1bp of cuts priced in for the November meeting implying around a 1/3 probability of a 25bp cut. Ahead of the data only 2.1bp was priced for November (and intraday we reached 10.5bp at the peak). A cumulative 16.9bp is now priced by December (implying around a 2/3 probability of a 25bp cut this year – this was pricing around a ¼ probability ahead of last week’s labour market release).
• We look in details at the drivers of the release.