The reason inflation surged by more than the markets were expecting last month is down to a quirk in the way the Office for National Statistics (ONS) chose to compare air fares.
The statisticians used a bizarre methodology that compared term-time prices in 2024 with peak holiday fares in 2025.
Most economists had predicted that Consumer Price Inflation (CPI) for July would remain flat, month on month, at 3.6 per cent. But the index rose to 3.8 per cent, the highest in 18 months.
“The rise in the annual rate reflected a large upward effect from air fares which rose by 30.2 per cent between June and July 2025,” the ONS said on releasing the figures.
The ONS has since told The Independent the increase came mainly from mainland European air fares, rather than domestic or long-haul trips.
Air fares for the Mediterranean and other parts of Europe traditionally rise sharply as soon as school term ends, particularly from England and Wales. Prices slump when schools go back. But this phenomenon should already be “baked in” to inflation calculations – precisely to avoid sharp movements in the CPI of the kind seen for July 2025.
The Independent has investigated how the statisticians handle European air fare data.
A range of flights is chosen, with outbound flights on what is termed “index day” and the return leg two weeks later.
The dates chosen were 9-23 July in 2024, but 15-29 July this summer.
As fares generally rise steadily through July, choosing the second Tuesday of the month as the measure for 2024 and the third Tuesday for 2025 inevitably meant a significant rise in fares.
This effect was compounded by the days on which most schools in England and Wales broke up for summer – earlier in 2025 than the previous year.
The ONS has told The Independent it believes the key break-up date in 2025 was Thursday 18 July – just three days after the “index day” this summer.
In 2024, the main break-up date was harder to identify, but fell in the week from 22-26 July.
Senior travel trade sources have confirmed that a significant number of families will fly out within a few days of term ending, and return a week or 10 days later. This causes a sharp increase in fares on…
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