Moody’s cautions that the UK is projected to maintain the peak inflation rate among G7 nations until at least the conclusion of 2024.
The forecast from the ratings agency suggests that British consumer prices will increase by an additional 3.9% in the coming year, despite witnessing the most rapid increase in interest rates since the 1980s.
The inflation rate in the UK is comparable to that of Italy and significantly surpasses other major advanced economies. For instance, Germany’s inflation is estimated to be around 3% next year, 2.5% in the US, and 2.1% in France.
At present, the UK’s inflation rate stands at 6.8%, leading the G7. For 2023, the average rate is projected to be a notable 7.8%, considerably above its G7 counterparts.
Although Moody indicates that inflation trends are decreasing across both developed and emerging markets due to the reduction in pandemic savings by households, there are factors that could alter this trajectory.
For example, there has been an uptick in food and energy costs since June, and tight labour markets are exerting upward pressure on wages.
