UK forecast to have highest inflation in G7 this year by OECD
According to an effective global policy group, Britain is expected to see the highest inflation rate of the richest countries in the world this year.
The Economic Cooperation and Development Organization (OECD) rose to 3.5%, the highest in the G7 in 2025.
This year, England has increased its growth forecast to 1.4%, but the economy is still expected to slow down next year.
The estimation comes as the chancellor Rachel Reeves prepared the budget of November that November puts taxes or reducing expenditures to adhere to their own rules on government borrowing.
Responding to OECD’s estimation, Reeves confirmed that the figures were “the British economy was stronger than the forecasts – the fastest growth of any G7 economy in the first half of the year”.
“But I know that there is more to create an economy working for working people and reward working people. I am determined to offer through our change plan.”
The latest monthly UK inflation figures showed that the ratio was 3.8% in August, and due to increasing food prices, OECD said Britain is one of the few countries affected by higher food costs.
The inflation rate is far above 2% target of the Bank of the UK, and the bank estimated that the rate will reach 4% before falling back.
Last week, the bank did not change interest rates and warned UK “has not yet come out of the forest” When it comes to inflation.
OECD expects the growth in the UK to slow down next year to 1% – it has not changed its estimation in June.
He said that this slowdown will be due to higher taxes or lower government expenditures, a “more strict financial stance” and increasing trade costs and uncertainty.
OECD increased the growth forecast in the global economy for 2025, saying that it was more resistant than expected in the first half of the year.
Now, as companies try to complete the agreements before the start of new US tariffs, partly growth is expected to grow from 2.9% to 3.2% in June due to the “pre -loading” of the activity.
In the United States, a strong investment in technology such as Artificial Intelligence (AI) helped a strong investment and OECD increased its growth forecast for the US this year from 1.6% to 1.8%.
However, OECD warned that growth in the second half of the year will “soften” in the second half of the year because the effect of higher tariffs is felt.
Tariffs are taxes on imported goods, and Trump imposed such taxes from various countries to the American coast.
OECD said the US tariff rates have increased in almost all countries since May, the total effective rate has reached 19.5% at the end of August and has been the highest since 1933.
Trump argued that import taxes would increase US production and business, but a few economists warned that they will increase prices for US consumers.
OECD said the full effect of tariffs has not yet been seen. While some companies have accepted smaller profit margins for now, some changes have been gradually removed over time.
However, the effect “expenditure choices, labor markets and consumer prices have become increasingly visible,” he said.
“Growth is expected to soften in the second half of this year, because the front loading activity is reduced and higher -effective tariff rates in imports to the USA and China reduce investment and trade growth.” He said.
