IMF raises UK inflation forecasts citing Middle East conflict

Summarised from 2 outlets · Updated 13 Oct, 12:02 · Archive

The International Monetary Fund has raised its inflation forecasts for the UK in 2026 and 2027, warning that Middle East conflict could push food and energy prices higher.

The International Monetary Fund has raised its UK inflation forecasts for 2026 and 2027, citing concerns that the Middle East conflict could push food and energy prices higher than previously expected. The IMF's latest World Economic Outlook predicts UK consumer prices will rise by 3.3 per cent in 2026, up from its previous forecast of 3.2 per cent. This would leave Britain with the joint second-highest inflation rate among the G7 group of major advanced economies. Inflation is expected to ease to 2.8 per cent in 2027, but that remains considerably higher than the 2.4 per cent rate previously forecast.

The IMF warned that a prolonged stalemate or further escalation in the Middle East could 'keep energy and food prices elevated and volatile', whilst weighing on economic growth and worsening the fiscal position of governments. The global body also cautioned that the impact could be compounded by extreme weather, cyber attacks and assaults on energy infrastructure. The warning arrives as households continue to grapple with the cost of living, with higher energy bills expected to put further pressure on family finances. The Bank of England has warned that inflation could climb to 'slightly above 4 per cent' in the first quarter of 2027, partly because of a rise in the household energy price cap in January, though inflation is then expected to fall back over the course of the year.

How it is being reported

• IMF issues new warning over UK inflation as food and energy pricesThe IMF has raised its UK inflation forecasts for 2026 and 2027, warning that the Middle East conflict could push up food and energy prices.Worcester News · 13 Oct, 11:38
• IMF issues new warning over UK inflation as food and energy pricesThe IMF has raised its UK inflation forecasts for 2026 and 2027, warning that the Middle East conflict could push up food and energy prices.Malvern Gazette · 13 Oct, 11:38

In this story: International Monetary Fund · Bank of England · Office for National Statistics · Middle East · United Kingdom · G7

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