Consumer inflation is forecast to hit the Bank of England’s 2% target later this year, the Office for Budget Responsibility believes.
After averaging 2.3% in 2026, CPI inflation will stabilise at 2% in each of the following four years until 2030, Chancellor Rachel Reeves (pictured) announced during the Spring Statement on Tuesday. Lower food and energy costs are driving these forecasts.
This mirrors the Bank of England’s forecasts to 2028, although it believes that inflation will be slightly lower in 2027 at 1.9%.
This means that the OBR has revised the 2.5% forecast for 2026 which was announced in November’s Budget.
If the OBR is right, inflation would fall from the 3.4% recorded in 2025, when global pressures pushed up energy and food prices.
Domestic issues were also a factor thanks to higher administered prices (set by costs rather than market forces) and robust wage growth.
Retail inflation does not anticipate costs falling as hard as the consumer index. It predicts 3.1% for this year, 3% for 2027, 2.8% for 2028, 2.9% for 2029 and 2.3% for 2030.
