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United Kingdom Inflation

United Kingdom Inflation

Inflation in United Kingdom

The United Kingdom saw inflation in line with the Central Bank's target of 2% on average in the previous decade. Inflation remained relatively stable until 2016 but began to rise post-Brexit due to currency depreciation. The COVID-19 pandemic further influenced inflation, leading to a significant spike in 2021-2022, driven by supply chain disruptions and increased consumer demand.

Consumer price inflation in the United Kingdom averaged 2.4% in the ten years to 2022, above the Major Economies' regional average of 2.1%. The 2022 average figure was 9.1%. For more inflation information, visit our dedicated page.

United Kingdom Inflation Chart

Note: This chart displays Inflation Rate (CPI, annual variation in %) for United Kingdom from 2014 to 2023.
Source: UK Office for National Statistics.

United Kingdom Inflation Data

2018 2019 2020 2021 2022
Inflation (CPI, ann. var. %, aop) 2.5 1.8 0.9 2.6 9.1
Inflation (CPI, ann. var. %, eop) 2.1 1.3 0.6 5.4 10.5
Inflation (PPI, ann. var. %, aop) 3.4 1.4 -1.0 5.2 16.0

Inflation remains steady in January

Inflation came in at 4.0% in January, unchanged from December’s result and twice the Bank of England’s 2.0% target. However, the reading was below market expectations. Looking at the details of the release, lower price pressures for food were offset by smaller drops in housing and transport costs. The trend pointed down, with annual average inflation coming in at 6.8% in January (December: 7.3%). Meanwhile, core inflation edged down to 5.0% in January, from the previous month's 5.1%. Finally, consumer prices fell 0.58% in January over the previous month, contrasting the 0.42% increase recorded in December. January's result marked the weakest reading since January 2019.

Our Consensus is for inflation to fall sharply in the coming quarters on a higher base effect and an expected loosening of the labor market, but to remain slightly above the Bank’s target.

On the outlook, Berenberg’s Kallum Pickering said: “Due to the rapid acceleration in price growth through 2022 and H1 2023, yoy inflation rates remain inflated by base effects – and hence give a distorted picture of the recent trend in prices. [...] the picture is completely different on a six-month basis. With almost no change in the overall price level between August and January, six-month annualised inflation has hovered around 1% in the previous three prints. [...] Short of another major supply shock to prices, yoy rates of headline and core inflation look set to fall rapidly further over coming months as base effects fully wash out.”

Consensus Forecasts and Projections for the next ten years

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects British inflation projections for the next ten years from a panel of 49 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable inflation forecast available for British inflation.

Download one of our sample reports to visualize what a Consensus Forecast is and see our British inflation projections.

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