The spiralling cost of living crisis will be worse than expected, and the peak will come later than had been thought - experts have said.
Torsten Bell, chief executive of living standards at think tank the Resolution Foundation, said the peak of inflation will now be both higher and later than previously expected, adding that policy makers need to be prepared.
Speaking to BBC Radio 4’s Today programme, he said: “I think we can say with certainty – and there’s obviously a lot of uncertainty around all of this as we’ve experienced over the last year – but what we can say with some certainty is that the peak of inflation will be both higher than we previously expected but also later.
“We thought this might be peaking at around 10% in the middle of the autumn, but we’re now heading towards over 10% and that peak won’t come until the early part of 2023.
Asked about a recent Resolution Foundation report saying inflation could rise to 15%, he said: “Look, we just need to be aware that there’s a lot of uncertainty around. It’s plausible that we could see figures well in excess of 10% if the historical relationships between different prices continues.
“If we look at what’s happening to manufacturers’ input costs right now, they’re rising at huge record levels – 24%. Service producers are seeing inflation of their input costs of around 5% and in the end, this is going to be passed through to consumers in some form or another.
“So I think we should all have a lot of humility about being absolutely certain what’s going to happen to inflation, but policymakers need to prepare for much higher inflation than we were expecting even a few months ago, and that’s despite some good news.
“If you look at some global commodity prices, they’re coming down from the peaks we saw earlier in this year – that’s true – if you look at what’s happening to lumber, if you look at what’s happening to lots of metals. So there is good news out there, but that’s all being wiped out by the very, very bad news that’s coming from global energy markets, particularly gas.”
