It was worrying enough when experts predicted inflation hitting double digits — which, according to Trading Economics it has, coming in at 10.1% in July — now leading bank Citi is predicting that it will hit a startling 18% in early 2023.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
What’s to blame for the dramatic increase? The burgeoning energy prices as we head into the winter, of course. Recent reports of gas and electricity prices rising 25% and 7%, respectively have been cited as the reason for the increased forecast. The US financial services group Citi expects the consumer prices index to surpass 18% in the first quarter of 2023, with the retail prices index inflation rate hitting 21%.
These numbers are significantly higher the previous predictions — which were already quite high due to increased living costs — which warned that inflation would reach 13% before the end of 2022 and hit 15% in early 2023.
Conservative leaders are now under even more pressure to come up with solutions to combat sky-rocketing inflation. And they need to think of something fast if they don’t want to repeat history. Back in 1976, inflation reached 18% thanks to an oil supply issue, and the UK was forced to seek a bailout from the International Monetary Fund.
While Russia’s invasion of Ukraine and its effect on wholesale gas prices plays a large part in this crisis, it really was just the cherry on top that served to exacerbate the existing issues that both COVID and the recovery from the pandemic had caused.
While indeed a global problem, Labour are blaming “Conservative mismanagement over the past 12 years” for how bad it actually is in the UK and according to industry experts, it will only get worse. Labour’s proposition is to freeze energy bills during the winter, which could potentially help households save £1,000 and safeguard them from out-of-control energy prices.
Other solutions being proposed by the government include ramping up an already existing support package, which promises £400 to every household from October, and a “tariff deficit scheme” pushed by suppliers. Anyway you look at, the government will need to provide fiscal assistance to keep the situation from spiralling even more out of control.