mounting pressure
Goldman Sachs raised its inflation forecasts after February's inflation data came in higher than expected, along with the expectation that the impact of rising energy prices would be passed on to domestic prices following the outbreak of war in the region, especially after fuel prices were raised locally by up to 17% last March.
The bank said: “The bank’s commodities research team also raised its forecasts for global oil prices, with additional indicators of rising inflationary pressures locally, including an increase in train and metro ticket prices of up to 25%, as well as a sharp rise in the cost of fertilizers locally in line with global prices, which has begun to be reflected in the prices of key agricultural commodities, indicating an expected acceleration in food inflation in the coming weeks and months.”.
exchange rate
The Goldman Sachs report indicated that the decline in the nominal effective exchange rate of the pound by about 11% since the start of the conflict in the Middle East will add further pressure on prices.
The bank now expects the annual inflation rate to peak at 17.6% next August, an increase of nearly 3% from its previous estimates.
He predicted that inflation would reach about 16.8% by the end of the year, compared to 13.4% in his previous forecast, before declining in 2027 to less than 10% during the second half of the year.
