UK inflation may top 22% next year – Goldman Sachs

The Wall Street bank says rising natural gas prices could propel consumer prices in Britain to record highs

Inflation in Britain could jump above 22% in 2023 if gas prices continue to grow, Bloomberg reported on Tuesday, citing Goldman Sachs analysts.

The bank’s economists estimate that if prices keep rising, the UK may be forced to hike its energy cap by a further 80% in January, which would in turn push inflation up to 22.4% and cause a 3.4% drop in the country’s GDP.

Moreover, even if energy prices stabilize, analysts say the peak inflation rate will be around 14.8% in January, which is enough to plunge the country into a recession.

According to Bloomberg, investors expect drastic measures from the Bank of England in the coming months to battle inflation, including a key rate hike of up to 4.25% from the current 1.75%.

Goldman Sachs’ inflation forecast tops the previous one made last week by Citigroup, which expects inflation in the UK to surge to 18.6% next year, and the Bank of England’s expectation of 13%.

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