The latest leap in wholesale gas prices means that we now think CPI inflation will rise from 10.1% in July to a peak of 14.5% in January (up from our previous forecast of a peak of 12.5% in October). But as it has become increasingly likely that the next Prime Minister will offset more of the resulting hit to household real incomes, we’re not expecting the coming recession to be any deeper. As a result, the risks to our forecast that interest rates will rise from 1.75% now to 3.00% are increasingly on the upside.
Will the UK’s next Prime Minister be able to turn around the country’s economic fortunes? Find out what our economists think in our special Drop-In on Monday, 5th September. Register here.
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