Inflation could hit 15% this winter, EY’s consultancy arm has warned.
The worst-case scenario from economists at EY-Parthenon is based on the premise that Russian president Vladimir Putin blocks gas supplies to Europe, food prices soar and inflation expectations become entrenched among the population.
Inflation is currently at a 40-year high after hitting 9.4% in June.
Rates currently stand at 1.25% but could be lifted next week to 1.75%, the Bank of England governor Andrew Bailey admitted last week.
Mats Persson, a partner at EY-Parthenon and a former Downing Street adviser, said clients were war-gaming for higher inflation. “While clearly not the central forecast, firms are now scenario modelling a 15% inflation peak over the winter in the event that Russia turns off the taps and food inflation continues to rise,” he said.
