What if energy prices keep rising?

While ongoing supply shortages have led us to revise up our forecasts for crude oil and wholesale gas prices, we still expect significant falls this year which would reduce headline inflation in major developed markets by around 2ppts. But there are upside risks. In a plausible scenario involving Brent crude hitting $120pb, headline inflation would stay far above target in major DMs, at about 5.5% on average in 2022.