Bank of England: Second wave inflation signs scarce

Governor of the Bank of England, Andrew Bailey, indicates that the evidence of energy price increases feeding into a second wave of inflation in wages and prices remains limited, making it premature to confirm the extent of these impacts. Despite inflation in Britain rising to 3.1% in August 2026, exceeding the bank’s target of 2%, the Bank is focused on assessing the ongoing effect of higher energy prices on inflation, with forecasts suggesting it could rise to around 3.7% in the fourth quarter of 2026 and approximately 4.2% in the first quarter of 2027. Additionally, the British economy has demonstrated greater resilience than expected, after GDP grew by 0.1% in August. Meanwhile, forecasts point to an increase in the main interest rate to 4% in November, amid concerns over persistent inflationary pressures.

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