Inflation will be higher than expected throughout 2026, the British Chamber of Commerce has warned, despite a dip in fuel prices.
The influential business group’s latest report said the geopolitical situation remains “highly uncertain” but could “change the economic outlook considerably”. They predicted that UK Consumer Prices Index inflation – which was 3 per cent in January – will be at 2.7 per cent by the end of the year, having previously predicted it would have slowed to 2.1 per cent.
Oil prices dipped to $90 on Tuesday, after soaring past $100 on Monday, after Donald Trump suggested the Iran war would not last as long as originally expected. This remains significantly higher than prices before the war started: barrels were $73 on 27 February.
It comes after Rachel Reeves issued her own stark inflation warning amid fears the war in the Middle East will spark another cost-of-living crisis in the UK.
She told the Commons in a statement on Monday: “The economic impact of the situation in the Middle East will depend on its severity and its duration. The movements that we have already seen are likely to put upward pressure on inflation in the coming months.”
