Bank Of England Warns Energy Bills Will Hit £2,800; Inflation To Surge 10%

The cost of living will hit a record high this year, the Bank of England is warning, with inflation due to hit 10% and the price of energy bills and food likely to keep rising.

Inflation will hit 10% this year, the Bank of England has warned – and energy bills could be forced to a 40-year high. [bold, links added]

The UK economy is set to go into reverse, with rocketing energy costs expected to drive inflation up, the Bank of England has said today.

The dire forecast came as the Bank hiked interest rates from 0.7% to a 13-year high of 1%. Some of its rate-setters voted for an immediate increase to 1.25%.

The Bank is now predicting average annual gas and electricity prices, which soared to £1,971 ($2,431) last month, will leap again in October to around £2,800 ($3,453).

That together with a global surge in commodity prices, worsened by Russia’s war on Ukraine, will see Britain’s economy go into reverse in the final three months of this year, the Bank forecast in its latest update.

Its Monetary Policy Committee (MPC) believes the economy will then remain weak next year, and could shrink slightly.

The forecast of a dramatic slowdown will prompt fears that the economy will plunge into recession.

The MPC voted six members to three to increase its base rate – which influences what lenders charge – to 1%.

The three members voted for it to rise to 1.25%.

It is the first time the Bank has ever voted to raise rates four times in a row in the history of the MPC, going back to 1997.

The rate is set to keep rising, hitting an expected 2.5% by the middle of next year.

A series of interest rate hikes will be yet another blow for households already in the grip of a cost of living crisis.

Read rest at The Mirror