Gas prices in Europe have surged as households scramble to heat their homes during a cold winter, pushing inflation rates up to 2.8% in January. The Bank of England forecasts inflation could reach 3.7% this year. This inflation spike threatens to outpace wage growth, affecting living standards. While a slight economic growth of 0.1% was recorded, unemployment is expected to rise, indicating a challenging financial landscape. Analysts warn of stagflation, characterized by high inflation coupled with rising unemployment, should forecasts hold.
"The return of inflation will come as a financial wrecking ball to many households and businesses as price growth begins to match or overtake wage growth once again."
"City analysts expect a jump in the consumer price index (CPI) measure of inflation, and predict the unemployment rate will increase from 4.4% to 4.5%."
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