Brits face price hikes in Christmas run up as economy bounces back from Covid, warns Bank of England
BRITS face soaring price hikes in the run up to Christmas as the economy bounces back from Covid, the Bank of England warned tonight.
Shock predictions show that the Consumer Prices Index, currently at 2.5 per cent, could rise to four per cent by the end of the year.
That would be the highest rate in a decade, and nearly double the bank’s aim to keep it at around two per cent.
The bank also confirmed it would keep interest rates at record lows of 0.1 per cent in a further blow for savers, but it could rise next year.
If the doom-laden predictions come true it will push up the price of supermarket goods across the nation and squeeze the budgets of hard-pressed families.
But Governor Andrew Bailey promised that the rise in inflation would be temporary and that “we do expect it to come back to target”.
Shortages of raw materials and labour are likely to push up prices as economies around the world open up after recovering from the pandemic, economists say.
The news will be a further headache for Chancellor Rishi Sunak, who has to make a call on whether to rip up the triple lock later this year.
Pensions currently rise by the rate of inflation, wages, or 2.5 per cent — whichever is greatest.
Read our coronavirus live blog for the latest updates
Most read in Money
But wages have spiked this year, which could see the pension bill soaring by £7billion.
He was said to be considering a tweak to make it a double lock — but if inflation hits the predicted highs it will only tie his hands further.
But in slightly cheerier news, the bank said unemployment has already peaked at 4.8 per cent and would not rise further even when the furlough support scheme ends in September.