Government support schemes have been hugely successful in mitigating the financial consequences of the pandemic to consumers. But at the same time this support is being withdrawn, household spending power is being squeezed by a surge in inflation.
Rising oil and gas prices mean we now forecast CPI inflation will reach 4.5% in early-2022. We continue to expect the rise to prove transitory, but we will lower our forecast for GDP growth in 2022. And though, ultimately, we don’t expect the MPC to follow through on recent hawkish rhetoric, a rate hike is a live risk.
What you will learn: