BOC projects average inf of 2.9% in 2026 (July projection 2.5%), 3.1% in 2027 (July: 2.0%) and 2.2% in 2028 (July: 2.1%).

Rising energy costs are pushing up inflation, but the BOT's seven-member MPC unanimously voted Wednesday to keep the benchmark one-day repurchase rate at 1%—the fourth consecutive meeting with no change and the rate's lowest since September 2022. A Bloomberg survey of 23 economists had predicted the decision. Headline inflation accelerated to 2.82%, the fastest since April, but remained within a controllable range, allowing the BOT to maintain an accommodative stance while the government supports a recovery dented by higher energy costs.

Chancellor John Healey said the government will maintain the fuel duty freeze and extend the temporary 5p-per-litre cut introduced in 2022 at least until July. He said the measures, including lowering the red diesel rate to its lowest level in more than 20 years, will be kept through winter and spring as the Middle East war continues to push up fuel prices. The duty rate has been frozen since 2011 apart from the 2022 cut. The RAC reported UK diesel retail prices hit record highs in recent weeks. Fuel duty generates about £25bn a year (~$33bn).