UK inflation will hit 18% in early 2023, says leading bank C

[Suff]

Inflation in the UK will hit 18% early next year as consumers count the cost of the deepening energy crisis, one of the world’s biggest banks has predicted.

The US financial services group Citi said it expected the consumer prices index to breach 18% in the first quarter of 2023, while the retail prices index inflation rate would soar to 21%.

Citi’s prediction is significantly higher than previous modelling of the impact of rising costs. Earlier this month the Bank of England said it expected inflation to reach 13% by the end of the year, while the Resolution Foundation thinktank has forecast it could reach as high as 15% by early 2023.

The last time UK inflation reached 18% was in 1976 when an oil supply shock ripped through the global economy and left the UK seeking a bailout from the International Monetary Fund.

I'm guessing that the Bank of England MPC are going to be having a long hard look at another rate rise and, possibly, even a higher one. In the US two back to back 0.75% rate hikes seem to have slowed down the rise and brought things under a bit of control.

Time will tell, but if they do go for a faster rate rise the £ is going to jump in value again.

[cromwell]

The Bank of England have come in for some heavy criticism recently about being asleep at the wheel re inflation.
Rates are going to go up for sure. Hopefully savers will see the benefit of that but I won't hold my breath.

Hopefully the 18% inflation geezers are wrong and are as accurate as the "expert" computer modellers who said a million people a day (or whatever) were going to die in the UK from Covid.

[Suff]

Unfortunately economic modellers are far more accurate than virologists who want people to be scared so they will take sensible precautions.

Right now the government and the BOE are more scared of looking like trashing the economy than they are about whether inflation goes into the middle teens. That will change when inflation goes into the middle teens.

The thing is that this inflation is not being driven by the UK economy. It is being driven by factors outside the UK economy and by a dramatic increase in import prices of certain goods; which are then exacerbated by the UK economy. Should the BOE suddenly drive rates up dramatically, the £ will follow too. Driving down the price of imported energy and food and easing inflation.

At some point the BOE and the government will realise they are between a rock and a hard place and will start to spin the narrative towards stronger rate rises. Once they start talking about import costs and currency strength, you know they will be looking at faster and larger rate rises. They should also play down wage rises at the same time.

[Workingman]

Nobody cares much anymore. Interest rates of 6%, 7% or 8% will create a housing crash of 1980's proportions. In those days income-to-loan ratios were about 3x. now they are about 4.5x. People are borrowing over the odds for rabbit hutches - however, it could be a good thing to stop it.

We are not, all of us, going to see inflation of 18% or anywhere near. Nor are we going to be paying £5,000 p.a. energy bills. These are 'forecasts' based on very much worst case scenarios. The media, banks and Think Tanks are playing us. Try and get real figures for these forecasts, detail, and they are as rare as hen 's teeth.

Yes, there will be inflation, and, yes, interest rates will rise, but I am not buying into this crap.

And, yes, Bexshit is playing its part.

[Suff]

We are already running over 9% inflation and it is driven by energy prices which are outside our control.

I agree the BS about £6,000 or more energy bills is that. BS. But inflation will continue to rise until energy prices stabilise and they are a LONG way from that. Mainly because of the price caps and the need to keep raising them. The caps will continue to rise long after energy stabilises because the caps have distorted the market and it needs to catch up.

So expect inflation to rise and hand wringing to continue.