Back to Thatcher era

Rates rise to hit 1982 levels

In May 2021, the Bank did not think there were any problems with inflation.

Prices were rising slowly as the economy came out of lockdown, but nothing seemed too serious. It thought inflation would peak at 2.5pc later last year, not far from the 2pc target.

By June, as prices continued to edge up, the Bank was anticipating a peak of a little over 3pc.

By August it foresaw a peak of around 4pc in early 2022. Then by November, as pressures built, it thought the top would be around 4.8pc in the second quarter of this year. Then, unbeknown to the Bank, inflation was already above that level at the time it made the prediction.

Ever since, the change in pace has been astronomical: Threadneedle Street hiked the forecast peak to 6pc in December, 7.25pc in February and realised in March – once Russia invaded Ukraine and sent energy prices spiralling further – that there would be an even bigger peak in October.

Then, in May, officials predicted price rises would hit double figures by the end of 2022.

Now it expects annual price rises to hit 11pc by the end of the year, the sharpest jump in the cost of living since the start of 1982 – when Margaret Thatcher was in 10 Downing Street.