PolicyEngine Macro

UK topic · prices

Where are prices now, and where does the model put them?

CPI is 2.8% in 2026Q2 and core 2.6% in 2026-07; the model's median does not reach 3% again until 2027Q2.

01 — where it stands

The numbers, as the snapshot stores them.

CPI INFLATION

2.8%

stored as 2.8 · percent, year-on-year

Observation
2026Q2
Vintage
2026-08-26

CORE CPI INFLATION

2.6%

stored as 2.6 · percent, year-on-year

Observation
2026-07
Vintage
2026-08-26

Both series are published by the ONS as year-on-year rates, so the values above are the published rates themselves, not a transformation applied here.

How those readings have moved, derived from the same stored observations rather than typed in: CPI inflation -0.3pp against the prior quarter (2026Q1); Core CPI inflation +0.0pp against the prior month (2026-06).

02 — what the models see

The model view, and the same breath its limits.

boe-svar — the Bank of England structural VAR replication — forecasts headline CPI. The round generated 2026-07-29 puts the first open quarter, 2026Q3, at 2.5% with a 68% range of 1.8%–3.3%. Its median does not return to 3% until 2027Q2. And in the same breath:

  • Status: validated replication for selected outputs.
  • It cannot answer statutory policy reform effects.
  • It forecasts headline CPI only. Core CPI is shown above as an outturn; no model in this suite forecasts it.
  • Uncertainty is posterior 68% and 90% intervals; the sample ends 2025Q1 while the conditioning data run to 2026Q1.
boe-svar year-on-year CPI inflation: median and predictive ranges, from the archived round.
QuarterMedian68%90%
2026Q22.64%2.22%–3.09%1.94%–3.34%
2026Q32.54%1.83%–3.29%1.40%–3.85%
2026Q42.94%1.97%–3.97%1.38%–4.74%
2027Q12.97%1.74%–4.20%0.90%–5.11%
2027Q23.06%1.72%–4.28%0.80%–5.19%

Predictive validation: weak. No demonstrated skill against a random walk WITH DRIFT on any variable at any horizon. The grid runs 64 variable-by-horizon tests; adjusted together, the smallest Benjamini-Hochberg q is 0.36. Bank Rate comes closest (0.79 at h=1) and does not survive. The model looks strong against a driftless walk, but that benchmark forfeits the trend on a trending log level and is too weak to learn from. Under the published specification UK GDP is level with naive rather than worse -- an improvement, not a win. Benchmarks, horizons and the multiplicity table are on the validation page. Read the validation page →

03 — run it yourself

Every number above is a command away.

The CPI path above comes from the same command as the growth forecast. A second command carries it into household incomes: it scales the statutorily CPI-uprated benefit parameters by the model-versus-reference gap and scores that as a real reform. 

pe-macro forecast --horizons 8   # GDP and CPI, medians with 68% and 90% bands
pe-macro svar-inflation-incidence --year 2027 --reference obr   # who bears the CPI gap, by decile

Over MCP: forecast_uk for the path and svar_inflation_incidence for the uprating incidence. The incidence run excludes the triple lock and frozen thresholds, and says so in its own caveats. Connect a client →

04 — the data behind it

Source, coverage, and the immutable file.

Every value on this page is read from the vintage file linked here, not from a live call.
SeriesPublisherCoverageSnapshotsThis vintageNext release
CPI inflationONS · D7G71989Q1 – 2026Q232026-08-26.json16 September 2026
Core CPI inflationONS · DKO81989-01 – 2026-0722026-08-26.json16 September 2026

Headline CPI is stored quarterly and core CPI monthly, so the two observation periods above do not line up — that is the data, not a presentation choice.

The snapshot files are append-only and never edited, so a number published here can be reproduced against the data as it stood — browse the store, its release calendar, and the as-of recipe →