The Bank of England has been accused of “losing control of inflation” as a report says Brits will be facing a £2,300 hit to household pockets in the next year. Inflation is the rate at which the prices of goods and services increase over time. It affects the purchasing power of consumers and the profitability of businesses.

The Bank of England has a target of keeping inflation at 2% per year, but it has been overshooting this target for several months. According to a report by the Centre for Economics and Business Research (CEBR), inflation is expected to peak at 5.5% in April 2024, before falling back to 2.5% by the end of that year.

This means that the average household will have to spend an extra £2,300 on goods and services in 2024 compared to 2021. The report blames the surge in inflation on several factors, such as supply chain disruptions, labour shortages, higher energy prices, and rising demand as the economy recovers from the pandemic. It also criticizes the Bank of England for being too slow and timid in raising interest rates, which are the main tool for controlling inflation.

The Bank of England has defended its stance, saying that it expects inflation to be transitory and that raising interest rates too quickly could jeopardise the economic recovery. It has also argued that some of the factors driving inflation are beyond its control, such as global commodity prices and Brexit-related trade frictions. However, some analysts and commentators have accused the Bank of England of losing credibility and confidence, as it has repeatedly underestimated the inflationary pressures and failed to act decisively.

They have warned that if inflation becomes entrenched, it could have damaging consequences for the economy and society, such as eroding living standards, widening inequality, and undermining financial stability