British inflation to hit 15% in early 2023, major US bank predicts

Citi also revised up its expectations for Bank of England interest rates, predicting they would rise by 1.25 percentage points to 3% by the end of this year.

British consumer price inflation is likely to peak at an annual rate above 15% in the first three months of next year unless there are UK government measures to lower prices, economists at US bank Citi have forecast.

Earlier on Wednesday, official figures showed consumer price index (CPI) inflation hit 10.1% in July, above all economists' predictions.

"In our view, the composition re-affirms the risk of more sustained domestic inflation. In the absence of offsetting support, we expect CPI inflation to accelerate to over 15% in Q1-23," Citi economist Benjamin Nabarro wrote in a research note to clients.

Citi had previously forecast British inflation would peak at just below 12%.

In Ireland, consumer price inflation was running at 9.1% in July, according of Central Statistics Office figures released earlier last week.

Many Irish economists have predicted that consumer price inflation here will peak at around 10%, and then ease somewhat, but stay at historically-elevated levels through 2023.

The Irish government is planning at least €1bn worth of measures to help households and businesses through the cost-of-living crisis in its budget next month.

Citi also revised up its expectations for Bank of England interest rates, predicting they would rise by 1.25 percentage points to 3% by the end of this year, up from a previous forecast for a half percentage point rise in the remainder of 2022.

Reuters. Additional reporting Irish Examiner