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UK inflation forecast to average 3.4% in 2027, OBR says - Finance news and analysis from Global Banking & Finance Review
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UK inflation forecast to average 3.4% in 2027, OBR says

Published by Global Banking & Finance Review

Posted on October 28, 2026

2 min read

· Last updated: October 28, 2026

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UK Inflation Projected to Average 3.4% in 2027, Office for Budget Responsibility Says

OBR Releases Updated UK Inflation Forecasts

(Corrects attribution in headline to OBR, not Healey)

Key Highlights from the OBR Report

2027 Inflation Outlook

LONDON, Oct 28 (Reuters) - British inflation is set to average 3.4% in 2027, the country's budget watchdog said on Wednesday following finance minister John Healey's first budget.

Long-Term Inflation Projections

The Office for Budget Responsibility expects price growth to peak at 3.75% in early 2027. Inflation then average 2.1% in 2028 and 2029, before reaching 2% in 2030.

Recent Inflation Trends

September 2025 Inflation Spike

British inflation rose more than expected to 3.5% in September, its highest since October 2025, data showed last week, as the surge in energy prices caused by the Iran war gathered steam.

Factors Behind the Increase

An earlier section of the document showed inflation projections to the nearest half percent.

Comparison with Previous Forecasts

Impact of the Iran War on Projections

The OBR revised up its forecasts from its previous ones which were prepared before the Iran war broke out at the end of February and saw inflation at 2% in each year between 2027 and 2030.

Report Attribution

(Reporting by David Milliken and Andy Bruce, writing by Yoruk Bahceli, editing by Sam Tabahriti)

Key Takeaways

  • OBR revised up its CPI inflation forecasts following the Iran war–driven surge in energy prices, now expecting 3.4% in 2027, peaking at 3.75% early that year]
  • Inflation then moderates to around 2.1% in 2028 and 2029, hitting the 2% target by 2030
  • These forecasts contrast sharply with earlier projections made before the Middle East conflict, which had anticipated stable 2% inflation throughout 2027–2030

References

Frequently Asked Questions

When is UK inflation expected to peak?
UK inflation is expected to peak at 3.75% in early 2027.

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