- The UK is facing a renewed threat of rising inflation and potential interest rate hikes, primarily due to increasing oil and gas prices.
- Geopolitical tensions, specifically the US and Iran conflict, are driving up energy costs, which in turn are expected to push prices higher across transport, fuel, and production sectors.
- Money market traders are now betting on up to four interest rate increases in 2026, a significant change from earlier predictions of rate cuts.
- However, several economists, including those from Aberdeen, Barclays and KPMG, suggest the Bank of England may not raise rates as aggressively, with some forecasting a single cut this year or no changes.
- Inflation is projected to rise from March, potentially exceeding 3 per cent by July due to higher fuel and energy costs, with some forecasts suggesting it could reach 4 per cent later in 2026.
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