"If there's no change in the picture on prices from now on forward, we estimate something like a 1% higher level of consumer prices in the UK by the end of the year. We had thought, without taking all this into account, that the inflation rate in the UK might be pretty close to 2%. Right now, if prices don't change from where they are - both the spot and market expectations for futures prices, which is particularly important for the Ofgem price cap - by the end of this year we think the inflation rate would end the year not near 2% but nearer 3%."
"Material, significant, as yet not on the same scale as we experienced after Russian invasion of Ukraine. Enough to be noticeable and completely unwelcome, because there's no upside to all this. I'd have given you a different answer probably yesterday morning, and by the end of the week it could look different again. It's not clear which way we go from here."
The Office for Budget Responsibility warns that sustained energy price increases resulting from geopolitical tensions could significantly impact UK inflation. Oil prices have risen approximately 20% and gas prices roughly 50% due to conflict escalation. This could push UK inflation to around 3% by year-end rather than the previously anticipated 2%, representing an additional one percentage point increase in consumer prices. The impact is described as material and unwelcome, though not yet comparable to disruptions following the Russian invasion of Ukraine. Global energy markets remain highly sensitive to geopolitical developments, creating uncertainty about future price trajectories.
Read at London Business News | Londonlovesbusiness.com
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