UK inflation expected to average 4% in Q4 2026, 4% in Q1 2027

by@CHItrader

Summary

A Reuters survey has reported that UK inflation is anticipated to average 3.6% in the fourth quarter of 2026, increasing to 3.8% in the first quarter of 2027, and decreasing to 3.0% for the full year of 2027. These projections mark an upward revision from the previous September forecasts of 3.3%, 3.2%, and 2.5%, respectively. This inflation outlook suggests that the rate will continue to stay above the Bank of England's 2% target into late 2026 and early 2027, a situation partially attributed to rising household energy costs.

Analysis

Inflation outlook: Recent UK forecasts also point to inflation remaining above the Bank of England’s 2% target into late 2026 and early 2027, driven partly by higher household energy costs. Business expectations: A recent Bank of England survey found that UK firms expected their prices to rise slightly more slowly over the coming year, while wage-growth expectations remained steady.

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macropolitics

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