22 August: Investment Bank Raises Forecast On Back Of Soaring Gas Prices
UK inflation could peak at a near 50-year high of 18.6% early next year because of soaring wholesale gas prices, according to the latest forecast from Citigroup, writes Andrew Michael.
The investment bank says, with gas prices jumping by a quarter last week, the cost of living could reach levels not seen since the 1970s. It says this would force the Bank of England to raise the bank rate to 7% – four times its current level of 1.75% – if demand for higher wages became widespread.
UK and European wholesale natural gas prices are trading at nearly 10 times normal levels, and other forecasters have also raised their inflation predictions.
Last week, rising energy prices was one of the main contributors behind UK annual consumer prices reaching a 40-year high of 10.1% in the year to July 2022.
Citi forecasts that the UK’s retail…
