Inflation data for September came in lower than expected at 3.8% and it will impact how much benefits rise next year. Money reporter Jess Sharp brings you everything you need to know, as well as all today’s other consumer and personal finance news, in our Money blog…
Wednesday 22 October 2025 15:37, UK
A new market-leading savings account has been launched by Zopa. 
The Smart Saver account offers 4.75% AER for 12 months. 
The rate is made up of a 3.25% AER variable rate and a 1.5% bonus. 
You will get the 4.75% rate automatically for the first month, but to continue earning it, you’ll need to deposit at least £500 a month. 
In any month that you don’t deposit £500, your interest will drop down to 3.25% AER.
To open an account, you need to have a Biscuit current account with Zopa, be over 18 years old and be a UK resident. 
You can withdraw your money at any time without any penalties, and you can save up to £250,000. 
An expert’s thoughts… 
Our regular savings expert Anna Bowes from The Private Office said: “It’s good to see some competition continuing to keep best rates elevated – although once again this is a carrot to encourage people to open a bank account with the provider. 
“Before opening a current account in order to have access to a savings account, you should make sure that the current account is appropriate. 
“There is no monthly fee to pay to hold the current account, and you can earn 2% AER interest on any balance held. However, rather than leaving too much in the current account, it would make sense to move it into this linked easy access pot as it’s better to earn 4.75% AER rather than 2%.
“This is an app-only offering, so may not be appropriate for everyone, although these do seem to be getting more and more popular, especially for everyday banking.” 
Are there alternatives? 
Bowes said Cahoot was paying 5% but only on up to £3,000. 
Santander also has its Edge Saver paying 6% AER but only on up to £4,000 and there is a monthly fee to pay on the Edge current account needed to hold the savings. 
Pets can now be classed as baggage by airlines, meaning owners will be entitled to less compensation if their animal is lost. 
Europe’s highest court, the European Court of Justice, made the ruling in a case after a passenger tried to claim compensation for her lost dog. 
The passenger, who was named in court documents as Felicisima, lost her pet on a flight from Buenos Aires to Barcelona in October 2019.
Due to her size and weight, the dog, Mona, was supposed to travel in a pet carrier in the hold.
But she escaped while being taken to the plane and was never found. 
The owner filed a claim with the airline for €5,000 (£4,340) for “non-material damage” as a result. 
While Iberia accepted liability for the dog going missing, it argued that the amount she was claiming for exceeded the limit for checked baggage. 
The court ruled that the owner had failed to make any special declarations in relation to the baggage, and so could not claim the €5,000 and was entitled to a smaller amount. 
Simon Calder, travel expert at The Independent, said pet owners should try to take their animals on flights as cabin luggage instead. 
“The answer is to have a small pet that you can actually take into your cabin with you. A number of airlines will allow that. Of course, there are rules about how big it can be, but basically take your pet as cabin baggage if you possibly can.” 
Workers paid the voluntary real living wage are set to get a 6.7% pay rise after new rates were announced today. 
The hourly rate will rise by 85p to £13.45 an hour, or 6.7%, and by 95p to £14.80 an hour in London – a 6.9% increase.
For full-time workers, this means they will take home £2,418 more per year than someone on the government’s minimum wage – or £5,050 more if they work in London.
More than 16,000 employers, including Ikea, Uniqlo, Everton FC and Aviva have signed up to pay the real living wage, which is set by the Living Wage Foundation. 
In total, around 438,000 people are employed by businesses who have made the commitment, the foundation said. 
“We all need a wage that covers life’s essentials, and the real living wage is the only UK wage rate independently calculated based solely on what is needed to cover rising living costs,” Katherine Chapman, executive director of the Living Wage Foundation, said. 
“The new rates announced today will make a massive difference to workers and their families, helping them to better cope with the costs of rent, bills, food and other essentials, and to live with stability and security.” 
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We learned this morning that beef inflation hit 27.5% in September – which probably didn’t surprise anyone who has looked to buy mince or a steak lately.
Business and economics correspondent Paul Kelso has investigated what’s going on – have a read…
Economists had widely expected inflation to peak in September before starting to fall. 
But they were predicting a rate of 4% today, not 3.8%. So is this the peak – or are further rises on the way? 
Paul Dales, chief UK economist at Capital Economics, said this was “probably” the peak in inflation, and it should fall to 3.5% or less in October thanks to declines it utility and fuel prices. 
By the end of next year, he expects it to hit the Bank of England’s 2% target. 
“Food price inflation may yet rise further, perhaps back above 5% by December, but there are… good reasons to expect it to fall back next year,” he said. 
“And if we’re right in thinking that weak employment will significantly weigh on wage growth next year, then CPI inflation may surprise most people by falling to 2% by the end of next year.”
Yael Selfin, chief economist at consultancy firm KPMG UK, went further to say inflation could drop to 2% in the first half of 2026. 
Our business and economics correspondent Paul Kelso gives his take below… 
The chancellor will convene a meeting of cabinet ministers on Thursday to discuss ways to ease the cost of living and has signalled that cutting energy bills is a priority.
The easiest lever for her to pull is to cut the VAT rate on gas and electricity from 5% to zero, which would reduce average bills by around £80 but cost £2.5bn.
More fundamental reform of energy prices, which remain the second-highest in Europe for domestic bill payers and the highest for industrial users, may be required to bring down inflation fast and stimulate growth.
By James Sillars, business and economics reporter
The biggest one-day plunge in gold prices since 2013 was witnessed on Tuesday.
The precious metal – a safe haven in uncertain times – has been a big hedge for investors since Donald Trump returned to the White House given all the trade war volatility to date.
But spot gold costs plunged by more than 5% when profits from recent record highs were taken off the table.
It’s currently trading at the $4,100 level – a rise of 1% on the day. Hopes of a trade truce between the US and China helped drive the change in sentiment on Tuesday.
Signs that the language between Washington and Beijing is calming are still having an effect on the FTSE 100 where miners – linked solidly to the outlook for the global economy – are leading the way. It’s trading at 9,486, a rise on 0.6%.
Barclays was also among the winners – rising more than 3.5% in early dealing.
The bank delighted its investors with a surprise £500m share buyback and upgraded its performance target for the year.
Barclays reported a 7% decline in third quarter profits to £2.1bn but said that the decline was mostly explained by an increase in its provision for redress relating to the car loans scandal.
The bank said it had put aside an extra £235m to cover expected costs, raising its total to £325m.
We reported earlier that a long list of benefits are likely to rise 3.8% next April.
Many means-tested benefits, by law, are hooked to September’s inflation data.
Universal credit is not one of those – but last year the government uprated it by the same amount.
If it does so again this year, the Resolution Foundation estimates a rise of £6 per week for a single adult aged 25 or over in receipt of the UC standard allowance.
That’s actually 6.2% due to planned changes in how much the UC standard allowance will go up in the next few years.
“While this uplift will be welcomed by many, it is smaller than the 6.4% boost they would have seen had September inflation been 4%, as widely forecast,” the thinktank said. 
These benefits and tax credits are linked to inflation by law
For the rise earlier this year, the government also pledged the same increase for benefits including
With inflation coming in lower than expected, the chances of one more interest rate cut this year have improved. 
Markets are almost fully pricing in a 25bps cut at the Bank of England’s rate setting meeting on 18 December. 
Yael Selfin, chief economist at consultancy firm KPMG UK, said the 3.8% rate of inflation had kept a rate cut “on the table this year”. 
“While underlying price pressures remain elevated, services inflation came in below the Bank of England’s expectations. As a result, we think the door remains open for one final cut in December this year, particularly once policymakers have more clarity on fiscal policy following the budget, in addition to further expected loosening in the labour market,” she said. 
Rob Wood, chief UK economist at Pantheon Economics, said the Bank’s Monetary Policy Committee was now more likely to bring forward its expected cut in February to December. 
“We still think the MPC will skip November – the growth data and stabilising jobs suggest they can afford to wait still – and the 26 November budget also seems worth waiting for, as well as another round of inflation data,” he said. 
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