UK CPI inflation forecast 2026

Although inflation fell to more usual levels by 2024, prices in the UK had already increased by over 20 percent relative to the start of the crisis. In 2026, the average annual inflation rate for the United Kingdom is expected to be 2.3 percent, with the average rate for 2027 predicted to fall to twopercent. Due to this long period of high inflation, UK consumer prices have increased by over 20 percent in the last three years. The UK inflation rate was three percent in February 2026, unchanged from the previous month. For UK consumers, high inflation is one of the main drivers of the ongoing cost of living crisis. The RPI inflation rate in December 2025 was 4.2 percent, up from 3.6 percent at the start of the year.

The Cost of Living Crisis, driven by high inflation, pushed many UK households to the brink, while the overall economy, struggled to grow at a consistent pace. In the run-up to the election, polls put them far behind Labour for several months, while the populist right-wing party, Reform UK, grew in popularity at the Conservative’s expense. The Conservatives, by contrast, are heading for a spell in opposition after emerging as the largest party in the previous four UK elections. In this election, the Labour Party won a huge overall majority, the first time the party has won a general election since 2005. Less than a year after implementing cuts to Winter Fuel, the government performed a U-Turn on the issue, and also held back on more significant cuts to welfare.

Other statistics that may interest you UK government finances

• Producer Price Index for the industrial sector in China 2026
• When inflation peaked at 11.2 percent in October 2022, for example, core inflation stood at just 6.5 percent.
• Due to this long period of high inflation, UK consumer prices have increased by over 20 percent in the last three years.
• Another way of measuring inflation is to strip out the volatility of energy and food prices and look at the underlying core inflation rate.

Consumer Price Index (CPI) in China by sector and area 2026 Aside from the Retail Price Index, the UK also produces other inflation indices such as the Consumer Price Index (CPI) and the Consumer Price Index including owner occupiers’ housing costs (CPIH). Inflation by sector Central bank interest rates were raised globally in response to the problem, possibly putting an end to the era of cheap money that has defined monetary policy since the financial crash of 2008. Blocked-up supply chains were one of the main factors as the world emerged from the COVID-19 pandemic.

The UK was not alone in suffering from runaway inflation over the last few years. Inflation in the UK increased at a faster rate than expected in 2025, with the rate revised upwards from earlier predictions at the start of that year. By 2030, the projected UK oil production is set to fall to some 21.1 million metric tons of oil equivalent. The UK has begun decommissioning many of its North Sea oil platforms and will continue doing so in the coming years.

Annual inflation rate of the Consumer Price Index in the United Kingdom from 2019 to 2030

Another way of measuring inflation is to strip out the volatility of energy and food prices and look at the underlying core inflation rate. After energy prices in 2023 fell relative to 2022, the overall inflation rate in the UK declined quite rapidly, with core inflation overtaking the overall rate in July 2023. From 2021 onwards, prices in the UK rose rapidly, with the RPI inflation rate peaking at 14.2 percent in October 2022. As of the most recent month, prices were rising fastest in the education sector, at 7.6 percent, with prices increasing at the slowest rate in the clothing and footwear sector. While there have been some signals that the crisis eased somewhat in 2024, such as falling energy and food inflation, an increasing share of UK households have reported increasing living costs since Summer 2024. The two main drivers of price increases during this time were food and energy inflation, two of the main spending areas of UK households.

Current statistics on this topic

From late 2021 onwards, various factors converged to encourage a global acceleration of prices, leading to the ongoing inflation crisis. Despite the recent uptick in 2025, the inflation rate is expected to fall within the Bank of England’s target rate of two percent between 2027 and 2030. Hitting fiscal targets, such as reducing the national debt, will require a careful balancing of the books from the current government, and the possibility for either spending cuts or tax rises. After peaking at 251.7 percent shortly after the end of the Second World War, government debt in the UK gradually fell, before a sharp increase in the late 2000s at the time of the non GamStop global financial crisis.

In 2024, some 16.2 million metric tons of crude oil were imported from the U.S. Current forecasts suggest that while the debt is eventually expected to start declining, this is based on falling government deficits in the next five years. Although the UK government can continue to borrow money to finance its spending, the amount spent on debt interest has increased significantly in recent years. As a result of these factors, inflation surged across Europe and in other parts of the world but typically declined in 2023 and approached more usual levels by 2024. The war also disrupted global food markets, as both Russia and Ukraine are major exporters of cereal crops. Producer Price Index for the industrial sector in China 2026

Food and energy prices, which were already high, increased further in 2022. The UK’s high inflation and cost of living crisis in 2022 had their origins in the COVID-19 pandemic. The Retail Price Index (RPI) is one of the main measures of inflation used to calculate the change in the price of goods and services within the British economy. While the retail price index is still a popular method of calculating inflation, the consumer price index (CPI) is the current main measurement of inflation in the UK. Although inflation fell in subsequent months, it wasn’t until July 2023 that inflation fell below double digits, and as of late 2024, the RPI rate was still above three percent. This was followed by energy and food inflation skyrocketing after Russia’s invasion of Ukraine.

During the most recent period of high inflation, core inflation peaked at 7.1 percent in May 2023, and while taking longer to fall than the overall figure, has generally been declining since then. When inflation peaked at 11.2 percent in October 2022, for example, core inflation stood at just 6.5 percent. As of the third quarter of 2025, this was 3.6 percent, slightly below than the overall CPI rate, but more aligned with the overall figure than it was in 2022 and 2023. Between 2021 and 2023, inflation surged in the UK, reaching a 41-year-high of 11.1 percent in October 2022. Breakdown of crude oil imports to France 2023, by origin