Inflation rises to 3.5% The battle with the cost of living is back with inflation rising to 3.5% way above the governments target of 2%. But still way below the double digit inflation we experienced a few years ago. The rise has been put down to the recent rise in household bills. However, the rise in National Living Wage and higher National Insurance Contributions for employers will have also had an effect as businesses raise prices to cover these increases. We must wait to see if this changes the Bank of England stance on reducing interest rates. There had been hopes that the base rate would continue to fall through 2025.