An economist at U.S. bank Citi on Monday released a forecast for the UK’s inflation rate in 2023. According to Benjamin Nabarro, the UK’s consumer price inflation is expected to peak at 18% near the start of the new year. This forecast was raised from previous calculations due to the recent spike in energy costs.
With British inflation forecasts surging above the Bank of England’s 13% forecast in August, the bank’s Monetary Policy Committee was expected to have considered new policies that could be implemented to curb inflation and ultimately prevent it from reaching such heights.
“Should signs of more embedded inflation emerge, we think Bank Rate of 6-7% will be required to bring inflation dynamics under control. For now though, we continue to think evidence for such effects are limited with increases in unemployment still more likely to allow the MPC to pause around the turn of the year,” Nabarro wrote in a note to clients. In addition to this consumer price inflation rise, Nabarro also expects the nation’s retail price index to reach 20%.
Earlier this month, the Bank of England raised its interest rate by a half percentage point. The bank’s next monetary policy announcement is expected to take place on September 15.