UK inflation set to peak higher and remain stickier

We now see UK CPI inflation peaking at 7.5% in April and remaining higher throughout 2022. But inflation should retreat next year, and we see the odds of a scenario where the UK shifts to a higher inflation regime as low.

What you will learn:

• The upward revision to our near-term forecast reflects a larger-than-expected rise in the energy price cap, with government support measures failing to mitigate the impact on CPI.
• We’ve also raised our estimates for the rest of 2022 because we now anticipate oil and gas prices will remain higher for longer.
• The surge in inflation will place the biggest squeeze on household finances in more than a decade.