Against the backdrop of conflict in the Persian Gulf, our panel of economists predict that inflation is likely to increase in the second half of this year, peaking in November at around 3.7% on the CPI and around 4.7% on the RPI, on average, and staying at similar levels until next spring. The forecasters mostly agree on the main factors: rising domestic energy prices due to the forthcoming increase in Ofgem’s energy price cap; the continued closure of the Strait of Hormuz and its impact on inputs other than oil, such as fertilisers and fuel, producing more indirect price pressures, especially on food; and further downstream, possibly inflation in prices for durables such as appliances and cars as well. At least one forecaster regards the recent increase in producer price inflation as important.
