Budget 2021: Inflation to rise to 4% but less economic ‘scarring' than predicted

The chancellor has predicted that inflation is to spike to 4 per cent next year as the economy struggles to keep up with demand in the wake of Covid-19.

In his Budget speech on Wednesday, Rishi Sunak said inflation was 3.1 per cent in September and is “likely to rise further”, revealing the Office for Budget Responsibility now expects CPI to average 4 per cent in 2022.

Mr Sunak did deliver more positive news, suggesting that less economic “scarring” had happened as a result of the pandemic than previously predicted.

Sign up to our politics newsletter here.