As Bank cuts interest rates, new forecast predicts inflation will go up again despite dropping back to its two per cent target
, currently sits at the Bank of England’s target of 2 per cent, is likely to rise to 2.75 per cent by the end of the year and stay high for the foreseeable future, according to a new forecast.
Modal projections show that CPI, based on market interest rate expectations, is expected to drop to 1.7 per cent in the second three months of 2026. “It’s been a torrid three years since the inflation genie sprung out of the bottle, and while the financial pain the Bank has inflicted on the economy has been swift and severe, we haven’t spun off into an inflationary cycle like in the 1970s.
“Despite the headwinds that the UK economy has faced, there is an air of optimism that has for some months been desperately lacking, even if further cuts may not necessarily be as speedily forthcoming as some might like.”A rise in inflation could come as a blow to homeowners and prospective buyers. Although mortgages are not directly affected by inflation, many products are affected by the Bank of England’s base rate – which is influenced by inflation.
The first was the Covid pandemic. To start with, it led to a big shortage of products and services. This was followed by a sudden big demand for them which started to push up prices.
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