How to Beat Inflation in 2025: Practical Tips and Financial Strategies
The UK's Office for National Statistics reported CPI inflation at 3.6% in October 2025, down slightly from 3.8% in September, but prices continue to rise. The CPI tracks around 700 everyday items to measure inflation, while the RPI is still used for specific purposes such as regulated train fares. The Bank of England maintains a target of keeping inflation near 2%, influencing decisions on interest rates that affect mortgage and savings costs.
Consumers can use the ONS personal inflation rate calculator to estimate how inflation impacts their household budgets based on spending categories like mortgage or rent, energy, food, transport, and leisure.
Grocery inflation stood at 4.7% in the four weeks to 2 November, down from 5.2%. Budget-conscious shoppers may consider Aldi and Lidl as the cheapest options. Practical budgeting tips include setting a weekly budget, making a shopping list, choosing own-brand products, buying in bulk, and selecting seasonal or frozen produce. Signing up for shop loyalty schemes can also unlock valuable discounts and offers.
Energy costs remain a concern with Ofgem’s price cap set to rise to £1,758 from 1 January 2026. Fixed-rate energy tariffs can protect consumers from future price increases. For example, Outfox Energy offers a 12-month fixed tariff costing about £1,570 per year, saving approximately £188 compared to the January price cap, and Ecotricity offers a one-year fix saving about £155. Energy-saving measures such as draught-proofing, heating only necessary rooms, switching off lights and appliances, and using eco-settings can help reduce bills.
On savings, about half of current accounts offer rates that beat the 3.6% inflation rate. Notable examples include Sidekick with 4.48% AER tapering to 3.48% after six months on balances over £10,000, Cahoot offering 4.4% for a year, and Chip with 4.37%.
For longer-term strategies to outpace inflation, investing in stocks and shares has historically provided returns above inflation, though this is not guaranteed. Diversification across asset classes like equities, bonds, and property is recommended. Index-linked gilts can provide returns adjusted for inflation. Gold is also commonly used as an inflation hedge but can be volatile.
By combining careful budgeting, protection against rising energy costs, savvy saving accounts, and prudent investing, households can better manage the effects of inflation on their finances.
