Energy price increases will push UK inflation above 18% early next year, the highest level in nearly half a century, according to investment bank Citi.
Citi predicts that CPI inflation will reach 18.6% in January 2023, while RPI inflation will reach 21%, owing to extremely painful increases in energy bills that will push living costs into the “stratosphere.” Citi predicts that the price cap on energy bills in the United Kingdom will rise to £3,717 in October (up from £1,971 today), then to £4,567 in January, and finally to £5,816 in April.
The Bank of England’s target for inflation, the rate at which prices rise, is 2%, and it is currently at 10.1%. It happens before Friday’s announcement of the maximum amount suppliers can charge beginning in October. According to a revised forecast from Cornwall Insight, the average household energy bill will be £3,554 from October to January and £4,650 from January.
The consultancy’s estimate for October is marginally less than its earlier forecast of £3,582, but its estimate for January is higher than its earlier prediction of £4,266. According to Cornwall, the calculations showed a 15% increase in wholesale prices over the previous week.
The Bank of England predicted earlier this month that when the energy price cap is lifted this autumn, UK inflation will reach a peak of over 13%. Because of Vladimir Putin’s “weaponization” of Russia’s energy resources, wholesale gas prices have been rising since the beginning of August. These figures, however, are anticipated to fluctuate over the ensuing few months due to the “highly volatile nature of the market,” it was added.
Without any assistance from the government, Citi predicted that the price cap could reach £3,717 in October, £4,567 in January, and $5,816 in April. The price cap is the most energy suppliers may charge customers in Wales, Scotland, and England per unit.