The central bank said in a press release on Thursday that inflationary pressures had “intensified significantly” in recent weeks.
“This largely reflects the near-doubling of wholesale gas prices since May due to the curtailment of Russian gas supplies to Europe and the risk of further restrictions,” it said.
The Bank of England has also predicted that inflation will rise above 13% in the autumn, when energy bills are due to rise, and “will remain very high for much of 2023”.
However, the Resolution Foundation, a think tank, said on Wednesday that it expects energy costs to drive consumer price inflation to 15% next year.
Salary increases are not keeping pace. Real pay for UK workers suffered its biggest fall in more than two decades between March and May, official figures showed last month. Brits have been tightening their belts in response, spending less at supermarkets and ditching streaming subscriptions.
Global natural gas prices began rising last year as the world’s economies reopened from pandemic lockdowns, fueling a surge in demand. The skyrocketing costs have fed into consumer prices.
Russia’s invasion of Ukraine in late February – and subsequent oil and gas disruptions – has made matters worse, helping to push fuel prices to record highs. UK households are struggling. The average annual energy bill has risen by 54% this year to reach £1,900 ($2,300), with further increases almost certain. According to research firm Cornwall Insight, the average annual bill for millions of households will jump 83% from January to £3,600 ($4,380). That’s £300 ($365) a month spent on gas and electricity.
Average UK energy bills could top £500 ($613) for January alone, according to a new report from consultancy BFY Group.
Anti-poverty campaigners have been sounding the alarm for months.
About two-thirds of all low-income families have been left without essentials such as heat or a shower this year, according to a June report by the Joseph Rowntree Foundation.
A looming recession could make matters worse, leading to a wave of job losses. Fears of an economic slowdown intensified in June when the Organization for Economic Co-operation and Development said it expected the UK economy to stagnate next year – the only nation among the G7 to do so.
