UK Inflation Seen Hitting 3.5% as Iran War Lifts Energy Bills
Updated
Updated · bbc.co.uk · Aug 19
UK Inflation Seen Hitting 3.5% as Iran War Lifts Energy Bills
3 articles · Updated · bbc.co.uk · Aug 19
Summary
Economists now expect UK inflation to climb to about 3.5% later this year after last month’s rise in energy bills linked to the Iran war fallout.
Food inflation has stayed subdued at 1.3%—its lowest in nearly five years—and wages and benefits have generally outpaced prices, helping keep the squeeze milder than first feared.
October energy bills are still forecast to jump, though they should remain roughly £1,000 below the peak reached after the Ukraine war began; higher energy costs could still filter into food and other goods over coming months.
For Andy Burnham and Chancellor John Healey, a renewed inflation pickup could intensify pressure for more pre-Budget support, with any extra help likely to mean either higher taxes or tighter public spending elsewhere.
The Bank of England is not yet seen changing course, with some analysts still expecting no rate rise this year, but a prolonged Middle East conflict could disrupt energy markets again and push inflation above forecasts.