The Bank of England (BOE) has signaled that households are likely to face rising inflation to double figures before the end of the year for the first time since the early 1980s.
Based on the minutes of the BOE’s latest policy meeting, policymakers warned that inflation could soar further above the central bank’s forecast to reach a peak of 7.25% if energy prices remain high.
The last time the consumer price index (CPI) measured inflation in the UK, was in 1981 where interest rates were also high at 12% and emerging economies emerged from recession.
Companies in the UK are also already expecting that wage growth will increase by 4% to 6% this year, thus reinforcing the view that inflation could rise to double digits.
As a result, UK citizens are likely to face the worst cost of living crisis in 30 years.
However, the central bank is seen as calmer in controlling inflation for now after giving indications of a possibility of a 'break' from raising rates next year.
This is because, the Ukraine-Russia war has created uncertainty over the UK and global economy, which has caused the central banks of England and the rest of the world to be more cautious in setting their policies.
