Rising Energy Bills To Push Inflation Over 5% Next Year, Says BoE
Bank of England (BoE) deputy governor Ben Broadbent has suggested that UK inflation could reach more than 5% in 2022 due to rising retail energy prices and supply chain pressures.
Speaking at Leeds University Business School at the start of the week, Broadbent warned the inflation hike will come as regulator Ofgem is likely to increase the UK’s price cap in April of next year.
“Despite relatively weak growth over the past two years as a whole, domestically and globally, inflation has risen very significantly. In this country it was over 4% in October,” Broadbent said, “In the spring of next year, when the next rise in the Ofgem cap on gas and electricity bills comes through, it will probably climb comfortably through 5%, a long way north of the MPC’s 2% target.”
In October, UK inflation stood at 4.2%. Due to a rise in fuel and energy costs, this is its highest level in a decade and comes in at more than double the BoE’s 2% target. Broadbent called the current economic situation an “extremely challenging period for monetary policy.”