UK Daily Mail
Saturday, Aug 2, 2008
Soaring energy bills could push inflation to a 16-year high of five per cent next month, experts warned tonight.
At this level, it will be more than double the Government’s two per cent target, which could force the Bank of England into raising interest rates.
Economists blame the imminent inflation hike on the latest round of massive rises in families’ fuel bills.
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On Wednesday, British Gas sent shockwaves with its announcement of a record 35 per cent increase in gas bills.
It is the second time the energy giant, which has 16million customers, has hiked its gas prices at an inflation-busting rate this year.
In January, it was slammed for increasing its gas prices during the depths of winter by 15 per cent with immediate effect.
Philip Shaw, chief economist at Investec Bank, said he predicts CPI (consumer price index) will hit five per cent in September.
His forecast assumes that the other big energy giants will follow British Gas with price hikes in the next few weeks.
EDF Energy was the first to raise its prices followed by British Gas and their rivals are almost guaranteed to follow their lead.
Mr Shaw estimates price hikes will average 20 per cent in gas, possibly even more, and 16 per cent in electricity.