LONDON – British inflation will “comfortably” top 5% in April due to rocketing energy prices, well above the Bank of England’s (BoE) target, a high-ranking BoE official yesterday forecast.
Ben Broadbent, deputy governor for monetary policy, made the prediction ahead of a central bank policy meeting next week – during which BoE could decide to lift its historically low interest rate, or leave it intact.
Broadbent said inflation would soar further when the domestic energy price cap is hiked by United Kingdom regulator Ofgem.
“The chances are that (inflation) will comfortably exceed 5% when the Ofgem cap on retail energy prices is next adjusted in April,” Broadbent said during a speech in Leeds, northern England.
Ofgem had already raised the energy cap in October, which limits electricity and gas providers’ standard variable tariffs.
As a result, the UK inflation rate spiked close to a 10-year peak in October, buoyed by resurgent post-lockdown demand as well.
The Consumer Prices Index rate soared to 4.2%, the highest level since November 2011.
That followed 3.1% in September, and was more than double BoE’s 2% target.
The energy cap is widely expected to surge even higher in April, because it does not yet reflect rocketing wholesale gas prices during the summer months.
Inflation has soared around the world due to high energy prices and resurgent post-lockdown demand, raising the prospect that central banks will hike interest rates sooner than expected. – AFP, December 7, 2021
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