Business · Economy · 1 hr ago
IMF raises UK inflation forecasts as Middle East conflict drives up energy costs
The International Monetary Fund expects UK inflation to rise more than it previously forecast, as conflict in the Middle East drives up energy and food costs.
It forecasts prices will rise by 3.3% in 2026 and 2.8% in 2027.
The IMF says disruption to energy supplies is pushing prices higher around the world.
It warns that a prolonged or worsening conflict could keep energy and food prices high and make economic growth weaker.
The UK economy is forecast to grow by 1.3% in 2026, then slow to 1.2% in 2027.
Higher inflation could add pressure to household budgets, with the Bank of England expecting inflation to rise to slightly above 4% in early 2027, partly because of an increase in the household energy price cap in January.
The IMF expects inflation to ease later in 2027.
The IMF raised its UK inflation forecasts, citing higher energy and food costs linked to the Middle East conflict.
UK consumer prices are forecast to rise 3.3% in 2026, up from the previous forecast of 3.2%.
Inflation is forecast at 2.8% in 2027, compared with the IMF’s previous prediction of 2.4%.
The IMF expects UK economic growth to slow from 1.3% in 2026 to 1.2% in 2027.
The report warned that a prolonged stalemate or further escalation could keep energy and food prices elevated and volatile.
- Who
- The International Monetary Fund issued the forecasts, which concern UK households and the UK economy.
- What
- The IMF raised its forecasts for UK inflation and lowered its growth forecast for next year.
- When
- The report was published on 13 October 2026.
- Where
- The forecasts concern the United Kingdom. The report was released alongside IMF and World Bank annual meetings in Bangkok.
- Why
- The IMF linked the higher inflation outlook to the Middle East conflict disrupting energy supply and pushing up food and energy costs.
This story does not have two clearly opposing sides.
This story does not have a timeline yet.
- UK inflation forecast, 2026
- 3.3%, up from 3.2%
- UK inflation forecast, 2027
- 2.8%, up from 2.4%
- UK GDP growth forecast, 2026
- 1.3%, revised up from 1%
- UK GDP growth forecast, 2027
- 1.2%, revised down from 1.3%
- UK unemployment forecast, 2026
- 5.3%, down from 5.6%
What people are saying
keep energy and food prices elevated and volatile
Conflict in the Middle East and Europe is hitting people in the UK and around the world.
Sources
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