British consumer price inflation is forecast to average 2.3% in 2026, according to updated estimates from the Office for Budget Responsibility, Finance Minister Rachel Reeves said in a budget update speech on Tuesday.
In November, when Reeves delivered her full budget, the OBR projected inflation of 2.5% for this year. Since then, price growth has come in below expectations and is now expected to fall close to the Bank of England’s 2% target in April.
The watchdog said it now anticipates inflation to average 2.0% in both 2027 and 2028, unchanged from its November forecasts.
However, the projections were finalised before the recent escalation of conflict in the Middle East, which has driven up global energy prices and renewed concerns among investors about a potential fresh surge in inflation.
