Inflation targets keep on inflating with Goldman Sachs now warning prices in the UK will be rising at 22.4 per cent next year.
This latest forecast comes after US investment bank Citi predicted inflation would top 18 per cent at the start of 2023.
In its research note Goldman Sachs warned that inflation will spiral if energy prices continue to rise at their current rate. It forecast CPI to top 22 per cent – more than twice the current CPI rate, which stands at 10.1 per cent. This is also significantly higher than the Bank of England forecast, which currently predicts inflation will peak at 13 per cent in October. However these BoE forecasts look to be on the hawkish side, with another significant increase to the energy price cap expected in January.
This Goldman Sachs research notes also predicts that gross domestic product figures could drop by 3.4 per cent if nothing is done to curtail energy price rises.
These predictions come as households face an 80 per cent increase in their energy bills in the coming months, with main energy ‘cap’ rising from October 1 to keep pace with wholesale gas prices.
Inflation figures are also likely to be pushed upwards by higher food prices. Figures from the British Retail Consortium, published today, show food prices in the shops rose by 5.1 per cent in August, a significant jump on the 4.4 per cent recorded in July. The BRC figures show fresh food prices rose by 10.5 per cent, the highest rate since September 2008, when the global financial system was on the brink of collapse.
