UK inflation ‘could hit 22% next year’ as recession looms

US investment bank Goldman Sachs has warned UK inflation could hit 22% next year if high petrol prices do not come down.

Last week, UK energy regulator Ofgem confirmed the price cap would rise above £3,500 in October, and charities said millions of households would lose fuel unless the government intervened in any way. emergency, warning that there would be shortages.

Goldman Sachs economists wrote in a research note on Monday:

“(This) indicates that headline inflation will peak at 22.4%, well above our base forecast of 14.8%.”

Goldman Sachs said it expects the economy to contract 0.6% during 2023, with the recession starting in the fourth quarter.

The Bank of England said the Bank of England is expected to raise interest rates by 50 basis points to 2.25% next month.

The bank’s forecast comes after Citi economists said last week that consumer price inflation would peak at 18.6% in January.

Last week British Gas announced it would donate 10% of its profits to help fund families struggling with rising energy prices during the energy crisis.

The move follows calls for action from energy companies to ‘protect businesses, livelihoods and jobs’ in letters to Boris Johnson and Prime Minister Nadim Zahawi, both Tory leadership candidates.

British gas power parent company Centrica is giving politicians Covid-like grants to businesses, a temporary cut in value added tax to 5% and more powers to toughen regulations at Offgem

Rishi Sunak has said he will spend around £5billion helping the most vulnerable through the welfare system, and Liz Truss has achieved over £30billion in tax cuts in her main policy.