Research Briefing | Oct 7, 2021

UK | Inflation to peak higher, but this is not the start of a new high inflation era

Inflation to peak higher, but this is not the start of a new high inflation era

Inflation in the UK is set to peak higher for longer than we previously expected. But structural factors plus the likelihood that supply problems will eventually be resolved mean we still think the spike will prove transitory.
We now think that CPI inflation will peak over 4% and remain above 3% until H2 2022. Rising petrol prices in the near-term and another hefty rise in energy bills likely next April will fuel the increase.

What you will learn:

  • We now think CPI inflation will reach over 4% early next year
  • A key factor in inflation rising faster than we expected has
    been energy. Petrol prices increased strongly over the
    summer
  • Localised price and wage rises and shortages should bring
    about more supply, at least in some areas

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