Inflation Forecast To Hit 18% Early Next Year As Energy Crisis Deepens

Inflation will hit 18% early next year as consumers count the cost of the deepening energy crisis, one of the world’s biggest banks has predicted.

- Alex Lawson and Rowena Mason

£3,717 The Citi estimate for the annual cost of typical dual-fuel tariff household energy bills in October

£30bn The cost to the government of offsetting the increase in energy bills in full, according to analysts

The financial services group Citi said it expected the consumer prices index to breach 18% in the first quarter of 2023, while the retail prices index inflation rate will soar to 21%.

Citi’s prediction is significantly higher than previous modelling of the impact of rising costs. Earlier this month the Bank of England said it expected inflation to reach 13% by the end of the year, while the Resolution Foundation thinktank has forecast it could reach as high as 15% by early 2023.

The last time inflation reached 18% was in 1976, when an oil supply shock ripped through the global economy and left the UK seeking a bailout from the International Monetary Fund.

The forecasts have put pressure on the Conservative leadership candidates to say how they would tackle inflation. Liz Truss released a plan to “put the West Midlands at the heart of our economic revival” last night, without mentioning inflation.