UK inflation set to hit 18.6% in 2023 for first time in almost 50 years. according to Citi

UK inflation is on track to hit 18.6% in early 2023 for the first time in almost 50 years, new research has shown.

Based on the latest market prices, Citi predicted the retail energy price cap would be raised to £4,567 in January and then £5,816 in April, compared with the current level of £1,971 a year.

The last time consumer price inflation (CPI) crossed 18% was in 1976, according to the Office of National Statistics (ONS).

The investment bank said the latest predictions could be attributed to rising wholesale gas prices, adding that these shifts would lead to inflation “entering the stratosphere”.

It comes after CPI reached 10.1% last month, with the increase largely attributed to food prices and staples including toilet rolls and toothbrushes, according to the ONS.

Inflation is expected to fall back a little in August – although, according to estimates it could soar to 13.3% in October when the energy price cap rises again.

The Bank of England thinks the constant increase could push the country into a recession.

Energy regulator Ofgem will announce the energy price cap for the period between October and January on August 26.

Responding to the forecast, Citizens Advice Scotland chief executive Derek Mitchell said: “This is simply unsustainable for people who are hanging on by their fingertips right now, more big increases in prices and bills will drive people into poverty, debt and destitution.

“This cost of living crisis is going to cost lives without urgent and radical intervention from government on the scale of the 2020 pandemic or the 2008 financial crisis.

“People will freeze or starve unless they get help.”