HOUSEHOLDS will continue to feel the squeeze with UK inflation set to be the highest in major economies this year and next, experts say.
The UK has seen forecasts for spiralling prices increase for both 2025 and 2026 compared to earlier predictions putting pressure on family budgets.
Rachel Reeves welcomed UK growth boost for this year – but inflation set to remain highest in G7[/caption]
The warning shot to Brits comes as the International Monetary Fund has upgraded overall growth for the UK for this year – but lowered expectations for next year.
The latest inflation figures for the UK show it stands at 3.8 per cent for both July and August which is above the 2 per cent target rate.
It comes as retail experts believe food inflation could even hit 6 per cent by the end of the year.
But leading economists from the IMF have today published their world economic outlook which points to stubborn inflation in both the UK and America.
For the UK, they forecast that inflation will be 3.4 per cent this year which is up from 3.2 per cent predicted earlier.
Inflation overall will ease next year to 2.5 per cent but this is up from their 2.3 per cent prediction a few months ago, the IMF said.
The IMF have upgraded UK growth for this year marginally to 1.3 per cent, which is higher than previously forecast of 1.2 per cent.
But for 2026, they have downgraded the UK growth outlook from 1.4 per cent to 1.3 per cent.
Overall, global growth is expected to be 3.2 per cent this year despite the onslaught of uncertainty and Donald Trump’s tariffs.
Many countries saw growth brought forward this year to get ahead of the US tariffs.
The IMF report said: “Households and businesses front-loaded their consumption and investment in anticipation of higher tariffs.”
Chancellor Rachel Reeves said: “This is the second consecutive upgrade to this year’s growth forecast from the IMF.
“But know this is just the start. For too many people, our economy feels stuck.
“Working people feel it every day, experts talk about it, and I am going to deal with it.”
But shadow Chancellor Sir Mel Stride hit out at the government for allowing the cost of living to “balloon”.
He said: “The IMF assessment makes for grim reading. Inflation in the UK is now set to be the highest in the G7 this year and next – rising faster than expected because of the choices Rachel Reeves has made.
“Since taking office, Labour have allowed the cost of living to rise, debt to balloon, and business confidence to collapse to record lows.
“Taxes are rising to record highs and families are being squeezed from all sides.
“Working people are feeling the impact every time they shop, fill up the car, or pay their mortgage.
“Labour should be getting spending under control to bring down borrowing and avoid damaging tax rises, but Starmer and Reeves are simply too weak to do it.”
