Inflation in the UK will reach “astronomical” levels next year, and households will continue to struggle amid the current cost of living crisis, The Guardian newspaper reported on Wednesday, citing a leading think tank.
Rising gasoline and food prices will push inflation to 11% by the end of the year, according to an estimate by the National Institute for Economic and Social Research (NIESR). Official figures for June put inflation at 9.4%, the highest level since February 1982.
There will be “no respite” for UK households and businesses to “Astronomical Inflation” and the Bank of England will have to raise interest rates “up to the 3% mark” to bring it down, the Guardian quotes NIESR Deputy Director Stephen Millard.
The country will also experience a long recession and the economy will contract for three quarters in a row, Millard added.
The Bank of England base rate is currently at 1.25%. It was increased by 1% in June in an attempt to control inflation. The Bank of England is expected to raise interest rates another 50 basis points on Thursday, which could become its biggest increase since 1995.
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