Goldman Sachs allowed UK inflation to rise above 22% in 2023

Inflation in the UK could exceed 22% next year if gas prices remain high in the coming months, Goldman Sachs analysts say. writes Bloomberg.

Goldman Sachs explained that continued high gas prices would force the UK to raise electricity price ceilings by another 80% in January, which in turn could lead to peak inflation of 22.4% and a 3.4% decline in the kingdom’s GDP.

If energy prices are moderate, then inflation at its peak will be significantly lower and amount to 14.8%. However, this is enough to push the UK economy into recession, analysts say. This forecast is even more gloomy, notes Bloomberg, compared with the expectations of Citigroup economists, who allow prices to rise by 18.6%. The Bank of England expects inflation at 13% by the end of the year.

Late last week, the UK Gas and Electricity Markets Authority (Ofgem) reported on an increase in the cost of electricity in the UK from October 1 by 80% to 3,549 pounds ($4,200) per year.

Earlier, the UK Office for National Statistics (ONS) reported that annual inflation in the country increased to 10.1% in July from 9.4% in June. In May, it reached 9.1%. This was the highest value in the last 40 years and the highest among the G7 countries. As a result of rising prices, about 60% of adult residents of the country began to save on essentials, the situation was also aggravated by a decrease in real wages.

On August 4, the Bank of England reported that the UK economy is expected to will go in into recession in the fourth quarter. The regulator noted that inflationary pressure in the kingdom has increased significantly – mainly due to a significant increase in wholesale gas prices and the risks associated with limiting Russian gas supplies to Europe.

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