Absence of state aid would expose Britons to skyrocketing bills
© Tolga Akmen / AFP
The UK’s annual inflation could surge to 15% by the start of next year as further sharp increases in energy prices push up the cost of living, Bloomberg reported on Thursday.
Price pressures are likely to be stronger and last longer than expected unless the government develops relief measures for households struggling to pay their energy bills, the news outlet wrote.
The cost of goods and services in the UK had already spiked to a 40-year high in September, with the Consumer Price Index (CPI) gaining 10.1% in the 12 months to September 2022, according to estimates published on Wednesday by the UK Office for National Statistics.
This week Britain’s new finance minister, Jeremy Hunt, announced plans to subsidize fuel bills for households, but the proposed measure will last only until April, and analysts fear that consumers and businesses will still be exposed to soaring gas and electricity costs.
“The key question for the 2023 inflation outlook now relates to the energy price guarantee,” an economist at ING told Bloomberg.
In September, Prime Minister Liz Truss announced a price cap for energy, which was soon scrapped by the new finance minister. Experts say that without price limits, consumers will be highly dependent on energy prices fluctuations. Earlier, Hunt promised that “help for the most vulnerable” would be a priority for the government in dealing with high inflation.
According to the news outlet, a worsening outlook for inflation and the lack of a plan to tackle the cost of living crisis will affect the Bank of England’s approach to monetary policy and could force the regulator to raise interest rates in the near term.
However, making precise forecasts amid the current government turmoil is almost impossible as, following Truss’s resignation, another reversal of the country’s economic policy will be inevitable.
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