UK Inflation to hit 18% in 2023 as the prices of energy rise and recession look inevitable. Citigroup has predicted that the CPI inflation in the United Kingdom will hit 18.6% in January 2023. At the same time, the RPI inflation will hit 21% as energy prices jump massively. This is going to make it very difficult for the citizens of the UK to maintain their lifestyles. And those who live hand to mouth will be in even more trouble.
CPI Inflation vs. RPI Inflation
CPI stands for Consumer Price Index, which indicates the percentage change in prices of goods and services. So, a 10% CPI inflation rate means a similar increase in the prices of items consumed by households. The consumer price index covers some major categories like foods, housing, clothing, beverages, tobacco, fuel, light, bedding, and footwear.
On the other hand, we have RPI, which stands for Retail Price Index, measuring the price of retail goods and services. They also account for housing costs like rent and mortgage payments. It is less commonly used to measure inflation or benchmark the increase in prices as compared to CPI.
The chief UK economist at Citi, Benjamin Nabarro, said that they are expecting a 25% gas price hike and a 7% increase in electricity rates which are the main factors behind inflation. CPI inflation peak is expected to be around 18%, while for RPI, it might be around 20%. Considering the fact that we were saying inflation is really bad in the US, the situation is much worse in the UK.
The CPI inflation rate in the UK is 10.1% as of July, and the authorities should take this seriously to control further hikes. But instead of doing that, they removed the energy price cap, which will push inflation further high. At present, the energy price cap on bills is £1,971, which is expected to increase to £3,717 in October, £4,567 in January, and £5,816 in April.
Energy prices are going to be the main concern of the people living in the UK because of such a steep increase. Plus, the Nord Stream 1 pipeline will be closed for 3 days at the end of this month, which has already pushed the prices up.
What are your thoughts as Citigroup predicts UK Inflation to hit 18%? And do you think the common person could even survive such steep price hikes? Let us know in the comments below. And, if you found our content informative, share it with your friends.