The Bank of England might be forced to raise interest rates, thanks to the latest round of price rises from energy providers.
Inflation is set to rise further due to recent increases in energy prices, the Times reports.
Speaking to the newspaper, economists suggested that the government's benchmark consumer price index (CPI) could increase by up to 0.9 per cent above the Bank of England's own year-end prediction of four percent by as soon as the end of next month, if all of the "big six" energy providers put up their bills.
Over the past week, two of the six have already imposed hikes: EDF upped gas by 22 percent and electricity by 17 percent, while British Gas increased gas by 35 percent and electricity by nine percent. Should the other four mirror these rises, George Buckley at Deutsche Bank and Philip Shaw at Investec warned, CPI could hit 4.9 percent in just one month's time.
This is a full 2.9 percent above the Bank's own inflation target, and could lead it to impose swingeing increases in interest rates in order to bring the price rises. In turn, this would result in many mortgages becoming much more expensive to repay for consumers.
Commenting, Vicky Redwood at Capital Economics said: "If the [Bank was] seriously minded to raise rates, now would be the time to do it."
