UK Inflation Forecast to Overshoot Bank of England Target for Four More Years

The National Institute of Economic and Social Research (NIESR), a leading academic think-tank, has forecast that UK inflation will not return to the Bank of England's 2% target before 2030. This extended period of high inflation is primarily attributed to second-round effects on wages stemming from the ongoing conflict in Iran. NIESR's latest projections indicate that inflation will peak at 4.4% in February 2027, an increase from its previous forecast of 3.8% in July, and will continue to exceed the target in 2027, 2028, and 2029. The think-tank has urged the Bank of England to consider raising interest rates to 5% to combat these persistent inflationary pressures.