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Last week Britain's energy regulator said power bills will jump
80% to an average of 3,549 pounds ($4,188) a year from October,
plunging millions of households into fuel poverty and leaving
businesses at risk unless the government steps in. [nL8N3020Z2]
"In a scenario where gas prices remain elevated at current
levels, we would expect the price cap to increase by over 80% in
January (vs 19% assumed in our baseline)," Goldman economists
said in a research note.
"(This) would imply headline inflation peaking at 22.4%, well
above our baseline forecast of 14.8%."
Last week economists from Citi said consumer price inflation was
set to peak at 18.6% in January, more than nine times the Bank
of England's target.
Goldman said it expected a recession to begin in the fourth
quarter, with the economy set to contract by 0.6% in 2023 as a
whole - gloomier than the Reuters poll consensus for growth of
0.2% but less severe than the 1.5% drop predicted earlier this
month by the Bank of England.
The BoE looks set to raise interest rates by 50 basis points to
2.25% next month, Goldman said, adding that it saw upside risks
to its forecasts for additional 25 basis-point hikes in
following policy meetings.
(Reporting by Andy Bruce, Alun John and Tom Westbrook; Editing
by William Schomberg and Kim Coghill)
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