Inflation will fall back to 3 per cent next year in boost for families – after suffering worst year among G7 nations

INFLATION will fall back to 2.9 per cent next year in a boost for Rishi Sunak’s flagship to tame soaring price rises.

But the merciful drop for families will come after Britain suffered the highest rate of the world’s wealthiest countries in 2023.

Inflation is set to fall to 2.9 per centSWNS

The OECD’s inflation forecasts

Forecasts from the Organisation for Economic Cooperation Development show UK inflation is set to average at 7.2 per cent this year, the worst among G7 nations.

The PM has vowed to halve inflation by the end of this year from around 10 per cent last January to around 5 per cent by Christmas.

He is still set to miss the Government’s target of taming inflation to 2 per cent – with the Bank of England expected to hike interest rates this week to help wrestle down price rises.

The OECD also predicts the British economy to hit average growth of 0.3 per cent this year, rising to 0.8 in 2024.

While it is sluggish, ministers will take comfort that the economy is not shrinking like Germany and Argentina.

Chancellor Jeremy Hunt said: “Today the OECD have set out a challenging global picture, but it is good news that they expect UK inflation to drop below 3 per cent next year.

“It is only by halving inflation that we can deliver higher growth and living standards. We were among the fastest in the G7 to recover from the pandemic, and the IMF have said we will grow faster than Germany, France, and Italy in the long term.”

But Labour’s shadow treasury minister Darren Jones hit back: “Today’s economic forecasts show that the Tories are delivering more of the same. 

“Our ‘inaction man’ Prime Minister is too weak to turn things around, while his predecessor Liz Truss calls for even more uncosted policies that crashed the economy this time last year.”

In its report, the OECD said: “Activity has already weakened in the euro area and the United Kingdom, reflecting the lagged effect on incomes from the large energy price shock in 2022 and the comparative importance of bank-based finance in many European economies.”