The UK’s inflation rate could rise above 5% next spring, according to the Bank of England’s deputy governor for monetary policy.
It comes as rising fuel and energy costs and shortages of some goods continue to drive up the cost of living.
The latest figures from the Office for National Statistics showed that consumer price index (CPI) inflation rose by 4.2% in October, its highest rate in almost 10 years. The Bank of England said last month that inflation would hit about 5% in the second quarter of 2022 before falling.
In a speech at Leeds University Business School on Monday, Deputy Governor Ben Broadbent said: “The aggregate rate of inflation is likely to rise further over the next few months and the chances are that it will comfortably exceed 5% when the Ofgem cap on retail energy prices is next adjusted, in April.”
After the recent surge in wholesale gas prices, Ofgem’s cap on standard energy tariffs is expected to be increased which would mean higher bills for millions of households.
The deputy governor’s comments appear to suggest that CPI inflation might equal or even exceed the 5.2% recorded in September 2011, Sky News reported. It has not gone above that level since the 1990s.
Broadbent was one of the seven members of the BoE’s nine-strong Monetary Policy Committee who voted to keep interest rates on hold last month.
He said he had not yet decided how he would vote at the next meeting on 16 December 2021.