If there is a political plan to manage a possible crisis – beyond blaming international markets – it is hard to spot
Here’s a forecast to alarm the Bank of England, which has only just started preparing us for inflation at 4% by Christmas. Try 6% as soon as next spring. That it is not a casual piece of punditry from an outlier economist. It is financial markets’ year-on-year expectation for next April, as implied by the price of government bonds linked to the retail prices index. The numbers say 7% on the RPI, which would mean about 6% on the more widely used CPI, or consumer prices index.
Deutsche Bank’s economists have pointed out that it is probably not co-incidental that April is also the month when Ofgem, the energy regulator, next adjusts its price cap. The cap rose to £1,277 at the start of this month. At current energy prices, the mechanical model could next spit out a number close to £1,700, which would have seemed implausible even two months ago when gas prices started bubbling higher.