The Bank of England has predicted that inflation will rise to 5% over the next year.
UK wages will not be able to keep up with inflation, leading to struggles for households across the country.
Bank of England governor Andrew Bailey told the BBC: “I’m very sorry that’s happening. None of us want to see that happen. Inflation is clearly something that bites on people’s household income. I’m sure they’re already feeling that in terms of prices that are going up.”
Currently, inflation is ahead of the Bank of England’s 2% target at 3.1%. It is predicted to rise to 5% by next April.
Economics professor at Dartmouth College in the US criticised the Bank of England for the predictions. He said:
“We have no historical precedent for what’s happened. We’ve never seen a shock of this kind and the big thing we are seeing at the moment is the furlough scheme is coming off, there is going to be an increase in taxes on National Insurance [and] universal credit was just cut.
“So, the central bank really hasn’t a lot of clue what is going on. This is a really big uncertain world and everybody should tread cautiously. I’m afraid I have to say… you have to take what the governor of the Bank of England and the Monetary Policy Committee said with a very large pinch of salt.”