UK inflation will hit 18% in early 2023, says leading bank Citi
Inflation in the UK will hit 18% early next year as consumers count the cost of the deepening energy crisis, one of the world’s biggest banks has predicted.
Forecasters at the US financial services group Citi said it expects the consumer prices index to breach 18% in the first quarter of 2023, while the retail prices index inflation rate will soar to 21%.
The prediction outstrips previous modelling of the impact of rising costs. Earlier this month the Bank of England said it expected inflation to reach 13% by the end of the year as it raised interest rates for a sixth successive time.
Separately, the Resolution Foundation thinktank has forecast inflation could reach as high as 15% by early 2023.
However, on Monday Citi said the inflation rate was likely to be even higher next year with a peak of more than 18% in January.
The last time UK inflation reached those heights was in 1976 when an oil supply shock ripped through the global economy and left the UK seeking a bailout from the International Monetary Fund.
Benjamin Nabarro, the chief UK economist at Citi, said its forecasts had been updated after a 25% and 7% rally in UK gas and electricity prices respectively last week. On Monday, the price of gas for delivery to the UK next month rose even further, up almost 20% to 550p a therm after the Russian state-owned operator Gazprom announced unscheduled maintenance on the Nord Stream 1 gas pipeline into Europe.
It predicts typical dual-fuel tariff energy bills will hit £3,717 in October, higher than most forecasts of between £3,500 and £3,700. Ofgem, the energy regulator for Great Britain, will announce the level of the next price cap on Friday.
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