UK inflation is expected to rise to a 30-year high when December data is released on Wednesday, as rising cost pressures are felt across the economy.

Economists polled by Reuters forecast inflation to hit 5.2 percent, the highest level since the early 1990s and up from November’s 10-year high of 5.1 percent. They attributed upward price pressure to higher energy costs, strong demand for most goods and services, and continued disruptions to supply chains.

While economic forecasts are more uncertain than usual during the pandemic, most experts predict inflation will peak in April, prompting expectations that the Bank of England will raise key interest rates several times this year.

The December data will be the last before the Bank of England’s Monetary Policy Committee meets on February 3 to decide whether to raise interest rates again, after rising by 15 basis points to 0.25% in December – the most in more than three years. the first time.

KPMG UK chief economist Yael Selfin expects three rate hikes this year, given “the current level of high inflation”, “which would represent a significant shift in the stance of monetary policy”.

Paul Dales, chief UK economist at Capital Economics, expects inflation to rise to nearly 7% in April when energy regulator Ofgem will raise its default price cap on energy tariffs. If confirmed, that would be more than three times the Bank of England’s 2% target, which Dales believes would justify four hikes in bank rates to 1.25% this year.

Most developed countries, such as the UK, are experiencing high inflation, which reflects soaring global energy costs. in December, U.S. inflation rises at fastest pace since 1982 And it is the strongest since the euro was born.

In the UK, the CPI rose sharply in November at an annual rate of 26%, contributing 1.5 percentage points to the overall annual growth rate and pushing up household bills and transport costs.

Core annual inflation, which excludes energy, food and alcoholic beverages, jumped to 4 percent in November, the highest level in nearly 30 years. The adjusted average annual inflation rate — excluding a 5 percent change in the top and bottom prices of price increases — doubled in the five months to November, according to calculations by the National Institute for Economic and Social Research. 3.4%.

Consumer inflation for goods is currently higher than for services, reflecting more severe supply disruptions and stronger demand.

“Commodity supply has greatly exceeded demand, and supply disruptions have exacerbated shortages,” said Paul Mortimer-Lee, Niesr’s deputy director. “The result is higher commodity prices.”

This was especially the case for used cars, whose prices rose more than 27 percent annually in November, the biggest contribution to inflation since the data was first recorded in 1989, as people sought alternatives to public transportation. New car supply is limited.

Prices for sports and camping gear, which has surged in demand during the pandemic, are rising at the fastest pace on record.

Andrew Goodwin, an economist at Oxford Economics, warned that disruption caused by the Omicron coronavirus variant “will delay the rotation of consumer spending from goods to services” and could lead to “further upward pressure on global commodity prices in early 2022. “.

Food prices are also rising, which, combined with energy prices, has hit the poorest households hardest, as these items make up a larger share of their spending. In November, the annual growth rate of food prices more than doubled from the previous month to 2.5%.

But even in the services sector, where demand has been constrained by social distancing measures and fears of infection, inflation rose to 3.3% in November, about double the pace in July, reflecting higher costs and wages. Prices for accommodation such as hotels have risen at double-digit rates for most of the past four months.

Barclays economist Fabrice Montagné said the inflation data showed “signs of further expansion, including in the services sector,” adding to “pressure on the Monetary Policy Committee to raise rates earlier this year, and likely to do so aggressively.”

High inflation is also widespread geographically, with consumer prices rising in all regions, according to Niesr. Prices rose the fastest in London and the lowest in Northern Ireland.

Bank of England expects inflation to fall Starting “very soon” in the second half of 2022, it will continue to decline through 2023 as the disruption to supply and demand from the pandemic subsides.

Most economists expect a similar trend, with a base effect leading to lower annual rates as prices this year are compared to high levels in 2021.

But inflation forecasts have been revised upwards throughout last year, and some experts believe price growth may remain elevated for longer than currently expected.

“Rising commodity prices, supply chain disruptions, an additional VAT increase planned for April 2022 and the continuation of the pandemic mean consumer prices are likely to remain above the Bank of England target until 2024,” Niesr said.