The inflation rate in the health sector of the United Kingdom was ****percent in the second quarter of 2025, which was above the overall inflation rate for that quarter.

In the second quarter of 2025, the Consumer Price Index for health products and services in the United Kingdom was 139.4, indicating that, compared with 2015, prices in this sector have increased by 39.4 percent, compared with 38.5 percent for overall prices.

This statistic shows the consumer price index (CPI) for medical products, appliances, and equipment in the United Kingdom (UK) annually from 2003 to 2024, where the year 2015 equals 100. In 2024, the annual average price index value of medical products was measured at 126.5. This includes pharmaceutical products, therapeutic and other medical equipment.

This statistic shows the Consumer Price Index (CPI) of health insurance in the United Kingdom (UK) as an annual average from 2003 to 2023, where the year 2015 equals 100. In 2023, the annual average price index value of health insurance was measured at 151.2. Consumer price indices are designed to measure changes in the price of everything consumers buy. More information on CPI can be found here.

In May 2025, the UK inflation rate was 3.6 percent, with prices rising fastest in the housing, water, electricity, gas, and other fuels sector, which had an inflation rate of 7.8 percent. In this month, prices were rising in all sectors, with prices rising at the slowest pace in the clothing and footwear sector. UK inflation falls in 2024 After reaching a peak of 11.1 percent in October 2022, the CPI inflation rate in the UK gradually declined over several months, falling to a low of 1.7 percent by August 2024. An uptick in inflation has occurred since that month, however, and by the end of the year, inflation was at 2.5 percent above the Bank of England's target rate of two percent. Going into 2025, recent forecasts suggest that over the course of the year, inflation will average out at 2.6 percent, with the two percent target not met on an annual basis until at least 2029. Roots of the inflation crisis This long period of high inflation that the UK and much of the world experienced had its roots in the post-pandemic economic recovery of 2021. During that year, as consumer demand returned, global supply chains struggled to return to full capacity, resulting in prices rising. With inflation already elevated going into 2022, Russia's invasion of Ukraine added even more inflationary pressures to the global economy. European markets which were heavily reliant on Russian oil and gas gradually phased out hydrocarbons from their economies. Food prices were also heavily impacted due to Ukraine's difficulty in exporting its agricultural products.

The private healthcare market heavily drives the medical malpractice insurance industry. Under the Medical Act 1883, all healthcare professionals practising in the UK must hold clinical negligence cover. Insurers' revenue has increased at a compound annual rate of 2.3% over the five years through 2025-26. Given the nature of medical practice insurance, it's no surprise insurers contend with intense competition from state indemnity cover, and stringent regulatory hurdles. A surge in private healthcare demand, fuelled by record NHS waiting lists which reached 7.8 million in 2024, per NHS England, and growing dissatisfaction with the public health system is boosting malpractice policy volumes. High-growth areas like orthopaedics, gynaecology, and ENT are driving increased liability exposure as insurers underwrite more private procedures. Simultaneously, telehealth’s expansion brings new risk profiles, prompting insurers like AXA and Beazley to develop tailored virtual care coverage. Private cosmetic surgery, largely unregulated, is booming. Self-pay trends and NHS outsourcing, which now covers 10% of elective surgeries, widens the insured pool, while legal rulings affirms that medical liability rests with private providers, not NHS commissioners. This exposes insurers to more fragmented and risk-laden providers. Claims volumes are rising, with continued growth reported fuelled by greater legal access, patient awareness and “no win, no fee” models. Claims inflation hit 12% in 2023, according to Clyde & Co, driven by care costs, wage growth and personal injury discount rate (PIDR) changes. Social inflation and landmark rulings are expanding liability scope. In response, insurers are tightening underwriting, raising premiums and applying sub-limits. Rising legal and expert fees further erode margins, though recent FRC reforms may ease cost pressures. The sector faces a balancing act between sustainability and practitioner access. In 2025-26, revenue is expected to reach £1.8 billion, while profit is anticipated to hit 10.1%, boosted by data backed underwriting and investment income. Insurers' revenue is forecast to expand at a compound annual rate of 5.9% to £2.4 billion over the five years to 2030-31, while the average industry profit margin will reach 9.7%. Growing dissatisfaction with NHS waiting times is expected to divert patients to the private sector. Similarly, evolving legal precedent and social attitudes will likely pump up the probability of medical malpractice litigation and support sales as medical professionals seek additional coverage. Despite the industry's positive outlook, captive insurers are rising as a threat and legislative changes are expected to be key focus points over the outlook period.

Over the five years through 2024-25, travel insurance revenue is expected to fall at a compound annual rate of 2% to £554.7 million. The industry has been marked by fierce volatility in recent years due to the COVID-19 pandemic and turbulent economic conditions in the years following clobbering international travel. The COVID-19 outbreak clobbered international travel in 2020-21, brining demand for travel insurance down with it. Although insurers were quick to adapt, providing COVID-specific coverage for cancellations and unexpected medical expenses, this wasn’t enough to offset the drastic drop-off in demand. This resulted in many travel insurers suspending services during the pandemic, contributing to a mighty fall in revenue in the two years through 2021-22. As travel restrictions fully eased in 2022-23, travel rebounded and incited a rally in claims costs. However, rising premiums were able to absorb these costs, supporting profitability and driving revenue growth during the year. Demand for travel insurance has slowed in the years since as international travel closes in on pre-pandemic heights, beginning to plateau. At the same time, the cost-of-living crisis has dented consumer confidence and resulted in many opting out of holidays, weighing on revenue growth. Still, revenue is slated to spike by 12.9% in 2024-25. Additionally, COVID-19 was arguably a blessing in disguise, highlighting the importance of travel insurance and incentivising insurers to offer more personalised coverage, something allowed for by technological developments like AI. Over the five years through 2029-30, travel insurance revenue is forecast to swell at a compound annual rate of 4.9% to £705.7 million. Demand will to remain robust in the coming years as the effects of COVID-19 on travel remain at the forefront of holidaymakers’ minds, encouraging them to seek protection from unexpected disruption like political instability and natural disasters. The improving economic environment is also set to lift demand for travel insurance, making people more willing to go on holiday. Yet, despite inflation coming down, prices are still rising, placing continued pressure on people’s finances and weighing on revenue growth in the short term. Technological developments will continue to shake up the industry, providing insurers with niche markets to capitalise on and price risk effectively, something that wouldn’t have been possible before advancements in data analytics and AI.

The UK has an ageing population – for the Residential Nursing Care industry, this is an opportunity for growth with demand for more beds expanding. Homes have upped their average weekly fees, contributing to revenue. High inflation over the two years through 2023-24 has raised fees further. However, state involvement has limited growth, which has kept care fees artificially low for many nursing home residents. Residential nursing care revenue is anticipated to remain stable at £9.3 billion over the five years through 2024-25, including revenue growth of 3% in 2024-25. Weak government funding and wage cost pressures caused by the rising National Living Wage (which will increase to £12.21 in April 2025) have constrained profitability. Labour supply shortages caused by high turnover rates have been of particular concern. According to Skills For Care, the job vacancy rate in 2023-24 in the adult care sector was 8.3%, way above the average rate in the UK economy. That being said, the vacancy rate is declining thanks mainly to a government-driven recruitment drive to attract overseas workers, which has been helped by reducing visa requirements. Rising real household disposable income had supported more self-funded residents, aiding residential nursing care. However, data from the ONS revealed the percentage of self-funded residents fell from 36.7% in 2019-20 to 34.9% over the year through February 2022. In the year through February 2023, this has risen again to 37% of the 372,035 care home residents. Families are still struggling with the rising cost of living, reducing the number of people able to afford private care home costs, which has somewhat constrained revenue growth. Over the five years through 2029-30, residential and nursing care revenue is estimated to expand at a compound annual rate of 4.1% to £11.4 billion. Robust demand from an ageing population will support industry growth. However, plans for adult social care reforms are to be released in two stages (the first in 2026 and the second in 2028), which has caused greater uncertainty for the sector's future. Staff shortage concerns will continue to plague nursing care.

There continues to be a growing trend of people caring more about their health and well-being, benefitting the Health and Wellness Spas industry. Wellness tourism has provided the industry with an expansive market of inbound clients attracted by spa towns and cities that have invested in contemporary and luxury spa businesses. However, over the five years through 2024-25, industry revenue is anticipated to decline at a compound annual rate of 1.6% to £7.9 billion. Spas suffered a sharp downturn in revenue in 2020-21 following the COVID-19 outbreak, which led to temporary closures of spas and social distancing restrictions. Following a strong resurgence in spa attendance in the two years through 2022-23 owing to the easing of lockdown restrictions and pent-up demand, revenue has continued to grow and is expected to climb by 4% in 2024-25, supported by an almost complete recovery in international tourist numbers. Spas fluctuate with consumer trends. Disposable incomes and consumer confidence are still struggling in 2024-25 because of high inflation and the cost of living that's been weighing on individuals since 2022-23. The cost-of-living crisis is a heaby burden on consumer confidence and on revenue growth, as individuals are more frugal. Spas are increasingly competing against each other by marketing all-inclusive packages, couple retreats and group sessions to attract younger demographics. However, the most profitable markets remain in the highest income quintiles who are less afflicted. Over the five years through 2029-30, industry revenue is anticipated to grow at a compound annual rate of 3.2% to reach £9.3 billion. Rising living costs will persist in the short term, limiting industry growth. Spas will have to keep contending with a skills shortage due to the introduction of a points-based immigration system in January 2021, which is likely to drive wage growth. Nonetheless, consumers are expected to become increasingly concerned about their physical and psychological wellbeing, relying on spas to relieve stress and anxiety.