UK Inflation Projected To Hit 18.6% As The Prices Of Gas Experience A Surge

According to new reports, the UK’s inflation rate could reach a staggering 18.6% next year. Following research conducted by the Financial Times, this 18.6% projection has come from the Citigroup bank as they plead to the country’s Conservative party to find a resolution to the rising cost of living, and fast.

The report also highlighted that if the UK reaches this suggested rate next year, the inflation level will not only be the highest rate among other large, western economies, but it would be the highest inflation rate for the UK since 1976.

Why Is Inflation So High?

The UK’s inflation rate, which refers to the level at which prices rise, reached 10.1% in July, which is five times above the target outlined by the Bank of England.

But why is this happening and why is inflation continuing to trend upwards? Well, the answer lies in the higher energy prices as well as the prices of goods from abroad.

The UK is experiencing higher energy prices as a result of the invasion of Ukraine by Russia. As Russia is one of the world’s leading exporters of fossil fuels and Britain is not in the eurozone, its privatised energy network leaves it particularly vulnerable to rising gas prices.

Sarah Coles, the personal finance analyst at Hargreaves Lansdown, said: “Inflation at 18.6 per cent would push millions of people into dire straits.”

She added that these price rises are being driven by the essentials people need to stay alive, and the increase will hit those on lower incomes hardest.

In fact, Coles said that by April 2023, the lowest 10 per cent of earners will be spending an average of 41 per cent of their total income on energy.

What Does High Inflation Mean For Me?

The UK’s high inflation rate means a significant increase in the cost of living. With products and goods becoming increasingly expensive, there will be less money to purchase what you normally would.

Almost everything is impacted, due to energy costs increasing, or the raw materials increasing.