NIESR Forecasts UK Inflation to Peak at 4.4% and Stay Above Target Until 2030

UK inflation is set to remain above the Bank of England's 2.0% target until late 2030, peaking at 4.4% in February 2027, according to the National Institute of Economic and Social Research. NIESR upgraded its peak inflation projection from 3.8% due to energy shocks and second-round wage increases averaging 3.9% annually over the next three years. The institute raised its 2026 GDP growth forecast to 1.6% from 1.1%, but warned growth will slow to 1.1% in 2027 and 0.9% in 2028. NIESR projects just one additional Bank Rate increase in February, despite warning rates around 5.0% may be needed.