Inflation in Britain could reach levels not seen since the 1990s

 

 Inflation in the UK could exceed 7% this year to reach levels last seen in the 1990s, according to an annual study by The Times among economists.

More than half of the 32 respondents, including former senior Bank of England officials, said they expect consumer prices to rise by at least one percentage point from current levels. Prices rose 5.1% by the end of November, the highest rate in a decade.

 More than a third of economists expect inflation to peak between 6 and 6.5 percent, while 15 percent predict it will exceed even 6.5 percent. Two economists, including a former interest rate-setter, believe inflation will exceed 7%.

In an attempt to contain rising prices, the Bank of England tightened monetary policy last month for the first time in three years, raising the key interest rate from 0.10% to 0.25%.

More than 90% of economists surveyed by The Times expect interest rates to rise by at least 0.50% by the end of the year.

 The majority expects the economy to continue to recover this year, although some have expressed concerns about supply chain disruptions and new restrictions due to the coronavirus. Some economists have expressed concern about the looming burden on household finances as inflation and interest rates rise further.

All economists surveyed predicted that the unemployment rate would remain close to historically low levels.