Inflation and price indices
Inflation and price indices
The Bank of England’s base rate is currently 3.75%, while CPI inflation increased to 3.1% in August 2026, above the Bank’s target of 2%. (Source: Bank of England)
GDP growth is forecast to pick up slightly in 2027, but the economy has limited capacity to grow above 1.5% annually. (Source: Allianz)
Average fixed mortgage rates have started edging higher again and mortgage rates for 2026 – 2027 are expected to remain elevated. (Source: Home Owners Allianz)
UK house prices are forecast to rise by 24.5% over the next five years. (Source: Savills)
The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 3.3% in the 12 months to August 2026, up from 3.1% in July. Transport costs, particularly motor fuels, were the largest contributor to the increase. (Source: Office for National Statistics)
Insurance impacts
Following FCA interventions, the cost of paying for insurance monthly has decreased, saving consumers an estimated £157m. (Source: Financial Conduct Authority)
Interest rates for premium finance have fallen by an average 4.1 percentage points since 2022, saving consumers £8 on a typical motor policy and £3 on a typical home policy per year. (Source: Financial Conduct Authority)
Technology adoption has accelerated rapidly and 73% of UK insurers are now using generative AI in claims. (Source: Insurance Post)
Despite a softening insurance market, inflation continues to increase the cost of rebuilding, repairing and replacing assets. Brokers should encourage customers to regularly review sums insured, indemnity periods and asset valuations to help ensure cover remains aligned with current exposures and replacement costs.
Lower insurance premiums should not be interpreted as lower risk. The gap between falling rates and rising replacement costs can increase the likelihood of underinsurance if valuations are not reviewed regularly. (Source: marsh.com)
The cost and shortages of food and supplies
The cost and shortages of food and supplies
An exceptional summer period of heat and drought is already affecting agriculture with the Environment Agency reporting reduced crop yields, earlier-than-normal harvesting, restrictions on irrigation, concerns over livestock forage and possible shortages of straw. (Source: Gov.UK)
Food inflation, driven by global conflict, energy costs and supply-chain disruption, is expected to hit 9-10% by late 2026. (Source: The Food and Drink Federation)
Approximately 80% of fruit and nearly half of vegetables consumed in Britain are imported and many of the supplying regions are also experiencing heat and water stress leading to a lack of resilience in supply chains and anticipated increases to costs and availability of produce. (Source: The Guardian)
Insurance impacts
Rising food, fuel and supply costs can increase stock values and business operating costs. Brokers should encourage customers to review declared values regularly, particularly where stock levels, inventory values or supply-chain dependencies have changed significantly over the last 12 months.
