UK to Suffer Highest Inflation Rate Among G7 Economies This Year: OECD Forecasts 3.5% Price Surge

UK Forecast to Have Highest Inflation Among G7 Nations This Year: OECD The Organization for Economic Co-operation and Development (OECD) has forecast that the UK will experience the highest rate of inflation among the G7 advanced economies this year, with a projected 3.5% increase in prices across 2025. According to the OECD's report, higher food costs are cited as a key factor contributing to the expected inflation rate. The organization also increased its forecast for UK growth this year to 1.4%, but warned that the economy is still expected to slow next year. The OECD's prediction comes as Chancellor Rachel Reeves prepares November's Budget, in which she is expected to implement measures to stick to her own rules on government borrowing. This could include raising taxes or cutting spending, which would contribute to a tighter fiscal stance and further slow down economic growth. "The UK's inflation forecast is a concern for businesses and consumers alike," said an economist at a leading financial institution, who wished to remain anonymous. "Higher prices will erode purchasing power and reduce disposable income, making it more challenging for households to make ends meet." The OECD's report highlights the impact of higher food costs on inflation rates. Food prices have been rising globally due to factors such as supply chain disruptions, climate change, and trade tensions. In 2026, the OECD predicts that UK inflation will fall to 2.7%, still the second-highest among G7 nations. However, growth in the UK is expected to slow to 1% next year, unchanged from the organization's previous forecast in June. The slowdown in economic growth is attributed to a combination of factors, including the tighter fiscal stance and increased trade costs. As the UK prepares for its Budget, businesses are bracing themselves for potential tax increases or spending cuts. "Any measures that reduce government spending will have a direct impact on our operations," said a spokesperson for a major retailer. "We urge policymakers to consider the consequences of their decisions on businesses like ours." The OECD's report serves as a warning to policymakers to address the UK's economic challenges head-on. With inflation forecast to remain high, businesses and consumers must adapt to changing market conditions. In conclusion, the OECD's prediction highlights the need for policymakers to take decisive action to mitigate the impact of inflation on the economy. As the UK prepares for its Budget, businesses and households will be watching closely for any measures that could help stabilize prices and support growth. Background: The Organization for Economic Co-operation and Development (OECD) is a global policy group that provides economic forecasts and analysis to member countries. The OECD's report is based on data from various sources, including government statistics and market research. Context: The UK's inflation forecast is significant because it has implications for businesses, consumers, and policymakers. Higher prices can erode purchasing power, reduce disposable income, and slow down economic growth. Additional Perspectives: Economists at other financial institutions have expressed similar concerns about the impact of higher food costs on inflation rates. "Food price increases are a major contributor to inflation, and policymakers must take steps to address this issue," said an economist at a leading investment bank. Current Status and Next Developments: The OECD's report serves as a warning to policymakers to address the UK's economic challenges head-on. As the UK prepares for its Budget, businesses and households will be watching closely for any measures that could help stabilize prices and support growth. *Reporting by Bbc.*