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Danish Ekstra Bladet Writes:
Even though this article is mostly about UK economy. I decide to post it here and not in the UK politics thread.

Sinister prediction: inflation could explode
In Britain, inflation could peak at 18 percent next year, economist warns

It's not just at home that prices are soaring.

In Britain, inflation is raging too. Fears of recession prompted the Bank of England earlier in August to make the biggest interest rate jump in 27 years.

At home, inflation stood at 8.7% in July. However, a new prediction from US bank Citi makes the Danish scare figures look 'nice'.

Early next year
UK consumer prices are expected to be as much as 18 percent higher by early 2023 than they were at the start of this year, according to CNN.

'The question now is what policymakers can do to have an impact on both inflation and the real economy,' writes Citi Bank economist Benjamin Nabarro in a note to clients.

The last time inflation was at 18 percent in Britain was in 1976.

Hits 13 per cent in October
So there are signs that the British still have the worst of it ahead of them. Indeed, the Bank of England estimates that inflation - a measure of how much prices rise in a year - will reach 13% as early as October.

At the same time, the central bank estimates that the UK will enter a period of recession in the fourth quarter of this year, with the economy shrinking rather than growing.

Therefore, inflation must come down to an acceptable level, says Andrew Bailey, head of the Bank of England.

- Getting inflation down to two per cent is our first priority. Let there be no doubt about that.

- All options are on the table for our September meeting and beyond," he said following the interest rate rise in early August.

The Bank of England raised its key interest rate by 0.50 percentage points to 1.75%.

Normally, a rate hike would strengthen the local currency, but this time the picture was different.

The pound fell against the euro by 0.6% after the rate rise. This is probably due to the pessimistic assessment of the British economy in the coming year.

Markus