British economists expect UK inflation to peak at an average 4.4% around the start of 2027, above the official forecast. The Financial Times survey landed hours before the Bank of England is expected to raise rates by a quarter point.
British inflation is set to peak at an average 4.4% around the start of 2027, according to a Financial Times survey of economists. The figure sits well above official forecasts and arrives hours before the Bank of England is expected to raise interest rates.
Economists see a higher peak than the OBR
The survey covered 12 economists and was conducted this week. Most expect price growth to reach its highest level in the first quarter of 2027, and all but one expect a peak above 4.1%. Five forecast a peak of between 4.5% and 5%.
Those forecasts exceed the Office for Budget Responsibility's projection, published last week, of a 3.8% peak in the first quarter of next year. However, the OBR based its numbers on oil and gas prices from mid-August, before a re-escalation in the Middle East war pushed them sharply higher. The OBR said its forecast for early 2027 would have been "somewhat higher" at current market prices.
Energy bills and the Bank of England
Ofgem's energy price cap is on track to rise by over 25% in January, and EDF Energy estimates that household bills will jump by nearly £470 to about £2,200 a year for a typical household. Oil prices fell on Wednesday after a report of diplomatic progress between the United States and Iran.
Inflation stood at 3.5% in September, its highest in almost a year. A 4.4% reading would be the fastest since October 2023, when it hit 4.6%.
The Bank of England will set out its own inflation and growth outlook at midday on Thursday, after a meeting widely expected to agree a quarter-point rise in its key rate. The most common forecast among the surveyed economists for the peak in the benchmark rate is 4.25%, which implies two quarter-point increases. Traders are fully pricing in four quarter-point increases by the end of next year.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
