Inflation could soar to 18.6 per cent by the start of 2023, experts have forecast, as the increase in energy prices continues to push up the cost of living.
The consumer price index inflation already hit a new record-high of 10.1 per cent in July, as soaring food costs pushed the metric into double digits for the first time since 1982.
The Bank of England is predicting inflation could peak at 13 per cent by the end of the year, but economists at US bank Citigroup are warning that it may soar to more than 18 per cent by the start of 2023.
Citigroup expects inflation to reach 18.6 per cent in January, in response to the sharp increase in the energy price cap which is expected to hit £4,500 in January.
Just last week the investment bank predicted inflation would rise to 15 per cent by the turn of the year, with the new estimate showing just how volatile the situation is.
Benjamin Nabarro, chief UK economist at Citigrouo, said: “We now expect CPI inflation to peak at over 18 per cent in January.”
If this level was reached, it would be higher than the peak of inflation after the second Opec oil shock of 1979, which saw CPI soar to 17.8 per cent, according to estimates from the Office for National Statistics (ONS).
Such a staggering rate of inflation would prove catastrophic for millions of households already struggling to make ends meet and push the UK economy into recession.
Derek Mitchell, of Citizens Advice Scotland, said help was needed now with energy bills and the cost of living.
He said: “This is simply unsustainable for people who are hanging on by their fingertips right now, more big increases in prices and bills will drive people into poverty, debt and destitution.”
“This cost of living crisis is going to cost lives without urgent and radical intervention from government on the scale of the 2020 pandemic or the 2008 financial crisis. People will freeze or starve unless they get help.”
To sign up to the Daily Record Politics newsletter, click here.
