LONDON/HONG KONG—Economists at Goldman Sachs warn UK inflation could top 20% early next year if soaring gas prices don’t ease, as recession looms I added that there is.
Last week, the UK energy regulator said electricity prices would jump 80% from October to an average of £3,549 ($4,188) a year, leaving millions of households without fuel and businesses at risk unless the government intervenes. said to be exposed to
“In a scenario where gas prices continue to rise at current levels, we expect the January price cap to rise by more than 80% (versus the 19% assumed in the baseline),” Goldman economists said in a research note. ),” he said.
“(This) suggests headline inflation will peak at 22.4%, well above our baseline forecast of 14.8%.”
Last week, Citi economists said consumer price inflation will peak at 18.6% in January, more than nine times the Bank of England’s target.
Goldman said it expects a recession to kick off in the fourth quarter, with the economy contracting by 0.6% overall in 2023. It’s bleaker than the Reuters poll consensus for growth of 0.2%, but this year’s Less severe than the 1.5% drop predicted at the beginning of the month by the Bank of England.
The BoE looks set to raise interest rates by 50 basis points to 2.25% next month, Goldman said.