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UK inflation to surge to 3.75% as growth slows, OBR warns

Summarised from 2 outlets · 3 reports · Updated 28 Oct, 23:27 · Archive

The Office for Budget Responsibility forecasts UK inflation will peak at 3.75% by early next year, driven by energy price rises.

The Office for Budget Responsibility has forecast UK inflation will peak at around 3.75% by the start of next year, driven primarily by a sharp rise in household energy bills in January. The inflation is then expected to decline gradually but will not reach the Government and Bank of England's 2% target until 2028.

The new forecasts represent a significant revision upwards. The OBR said inflation would average 3.1% this year and 3.4% in 2027, compared with previous forecasts of 2.3% in 2026 and 2% in 2027. These higher projections come despite Government measures aimed at reducing living costs, including removing VAT from electricity bills and the standing charge from gas bills.

Economic growth is expected to slow sharply in response to the inflationary pressures. The OBR said UK gross domestic product is set to improve by 1.2% this year, but growth will decelerate to 1% next year as the combination of higher inflation and wider economic pressures constrains household and business activity. National debt levels are also forecast to swell over the next three years owing to higher-than-expected state borrowing.

UK inflation to surge to 3.75% as growth slows, OBR warns
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In this story: Office for Budget Responsibility · John Healey · Bank of England · UK

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