UK Inflation Forecast Raises Pressure for a November Rate Increase
Economists expect September inflation to reach 3.4%, while rising borrowing costs also complicate plans for next week’s budget.
Key takeaways
- Economists expect UK inflation to reach 3.4% in September.
- Bloomberg Economics forecasts a 25-basis-point rate increase in November and another in February.
UK annual inflation is expected to reach 3.4% in September, economists forecast, ahead of data due Wednesday. The outlook is strengthening market expectations that the Bank of England will raise rates at its Nov. 5 meeting.
The Bank has warned inflation could exceed 4% in early 2027, citing higher energy prices and a prolonged conflict in the Middle East. Bloomberg Economics says rising inflation, strong demand and a stable labor market may require rate increases. It forecasts a 25-basis-point increase in November and another in February.
Higher bond yields are also raising UK borrowing costs and limiting the government’s room to maneuver. Finance Minister John Healey is due to present a budget next week aimed at easing pressure on businesses and households, but financing measures to reduce living costs may require tax increases.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
