The firm says that UK inflation is expected to accelerate further in the months ahead unless the government steps in with fresh measures to lower prices, noting that:
"In our view, the composition reaffirms the risk of more sustained domestic inflation. In the absence of offsetting support, we expect CPI inflation to accelerate to over 15% in Q1-23."
They previously forecast UK inflation to peak at just below 12%, so this is a revision higher to that. Meanwhile, Citi has also revised up its expectations for BOE rate hikes, forecasting that the central bank would hike by another 125 bps to 3.00% by the end of this year - as opposed to their previous forecast of a 50 bps rate hike for the remainder of 2022.
