Economists have raised their forecasts for UK inflation following the surge in energy prices caused by the war in Iran, complicating the Bank of England’s decision on interest rates on Thursday.
The Treasury’s summary of independent forecasts, published on Wednesday, showed economists now expect annual inflation to reach 2.6 per cent in the fourth quarter, well above the 1.9 per cent forecast earlier this month by the Office for Budget Responsibility (OBR).
Andrew Wishart, economist at Berenberg, has raised his forecast for UK inflation in 2026 to 2.6 per cent, up from 2.4 per cent previously, assuming that the conflict is resolved quickly and the Strait of Hormuz reopens within weeks.
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