- The UK's official economic forecaster, the Office for Budget Responsibility (OBR), has warned that inflation could reach three per cent by the end of the year.
- Professor David Miles, an OBR committee member, said this is one percentage point higher than the previous two per cent estimate, primarily due to rising oil and gas prices linked to the Iran war.
- Oil prices are currently around 20 per cent higher and gas prices up by about 50 per cent, with Prof Miles describing the economic consequences as "nothing but negative" and "completely unwelcome".
- This revised forecast is a significant setback for Chancellor Rachel Reeves, whose economic strategy was based on inflation falling to the two per cent target.
- Analysts predict household energy bills could increase by 10 per cent from July, potentially raising Ofgem's price cap to £1,801 annually for a typical dual fuel household.
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