Finance
UK inflation seen at 2.3% in 2026, reeves says
Published by Global Banking & Finance Review®
Posted on March 3, 2026
1 min readLast updated: March 3, 2026
Quick Summary
According to budget update remarks by UK Chancellor Rachel Reeves on March 3, OBR forecasts show UK consumer price inflation will average 2.3% in 2026—down from the 2.5% projection made in November—and is expected to reach the Bank of England’s 2% target from 2027. External risks such as surging ene
UK Inflation to Average 2.3% in 2026 According to OBR Forecasts
Overview of UK Inflation Forecasts and Economic Outlook
Latest OBR Projections for Inflation
LONDON, March 3 (Reuters) - British consumer price inflation is set to average 2.3% in 2026, according to estimates from the Office for Budget Responsibility, finance minister Rachel Reeves said in a budget update speech on Tuesday.
Comparison with Previous Forecasts
In November, when Reeves announced a full budget, the OBR said it expected inflation of 2.5% this year.
Recent Inflation Trends
Since then, inflation readings have come in lower than expected and is likely to fall close to the Bank of England's 2% target in April.
Long-Term Inflation Expectations
Forecasts for 2027 and 2028
The OBR said it now expected inflation in 2027 and 2028 of 2.0%, in line with November's forecasts.
Potential Risks and Global Factors
Impact of Middle East Conflict on Energy Prices
The watchdog's forecasts were made before the recent escalation of conflict in the Middle East which has pushed up global energy prices and raised concerns among investors about a fresh rise in inflaton.
(Reporting by David Milliken Writing by William Schomberg; editing by William James)
Key Takeaways
- •OBR revises UK inflation forecast for 2026 down to 2.3%, previously 2.5%
- •Inflation expected to reach the 2% target in 2027 and 2028, consistent with prior view
- •Rising energy prices amid Middle East conflict present a potential upside risk to inflation outlook
Frequently Asked Questions about UK inflation seen at 2.3% in 2026, Reeves says
1Who announced the latest UK inflation estimates?
Finance minister Rachel Reeves announced the estimates during a budget update speech.
2What are the inflation expectations for 2027 and 2028?
Inflation is expected to be 2.0% in both 2027 and 2028 according to the OBR.