UK Inflation to Outstrip Target Until 2029: NIESR Forecasts

The National Institute of Economic and Social Research (NIESR), a leading UK think tank, has released its latest economic outlook. The forecast is grim for the UK economy, with inflation expected to exceed the Bank of England's 2% target until at least 2029.

NIESR Deputy Director for Macroeconomic Modelling and Forecasting, Stephen Millard, warned that 'the UK economy has shown surprising resilience in the first half of this year, but a slowdown is still expected.' He noted that even if peace is restored relatively quickly in the Middle East, inflation will rise further.

The think tank upgraded its 2026 gross domestic product (GDP) growth forecast to 1.1%, an upward revision of 0.2 percentage points from its previous forecast. This reflects the current reality that household consumption and the labor market have remained more robust than anticipated, despite heightened geopolitical risks.

NIESR forecasts the average annual inflation rate for 2026 at 3.1%, a significant upgrade from the 2.6% projected in June. However, the peak inflation rate was revised downward to 3.8%, expected in February 2027.