IMF predicts UK will face highest inflation in G7
The International Monetary Fund (IMF) has cautioned that the UK is set to have the highest inflation rate among G7 nations in both 2025 and 2026, as it raised its projections for UK price growth in its latest World Economic Outlook.
In its report, released on Tuesday to coincide with the annual meetings of leading politicians and central bank bosses in Washington DC, the IMF said inflation in the UK would rise “more sharply than expected” in both years, compared with projections published just three months ago, News.Az reports citing foreign media.
The revised forecasts suggest UK households are likely to face persistently higher prices, even as the central bank move to bring inflation under control.
The IMF now expects UK inflation to average 3.4% in 2025, a revision upward from its previous forecast of 3.2%. Inflation is then projected to slow to 2.5% in 2026, still higher than the 2.3% figure anticipated earlier this year.
It means UK households are expected to face the highest rate of price inflation across all the G7 group of advanced economies over the two years.
The UK Consumer Price Index rose 3.8% in both July and August, the highest levels recorded since January 2024, according to the Office for National Statistics (ONS).
The increase has been most notable in the food and hospitality sectors, where firms and industry bodies say cost rises have been fuelled by higher labour and tax burdens.
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