OECD says Britain will have highest inflation rate of G7 nations this year

The UK is expected to suffer the highest inflation among the G7 nations this year, the Organisation for Economic Cooperation and Development has said.

- Heather Stewart Phillip Inman

Amid resurgent food prices, with some retailers blaming the UK government's £25bn-a-year increase in employer national insurance contributions (NICs) for pushing up costs, the OECD predicts that inflation in the UK will average 3.5% this year.

The figure is well above even the US, at 2.7%, despite Donald Trump imposing the biggest tariffs since the 1930s on imports - a policy expected to push up prices.

The OECD said UK inflation would slow to 2.7% next year, still well above the Bank of England's 2% target.

The Bank has pointed to regulated prices such as water and energy bills, as well as the NICs rise, to help explain above-target inflation.

The OECD also suggested tough tax and spending plans would put the brakes on economic growth in the UK over the next 12 months.