Gas prices are set to soar as a result of the UK Government’s controversial gas price cap and inflation measures, and this will have a big impact on the wider economy.
Dr David Gorman of the University of Bristol’s School of Economic and Social Sciences said that if gas prices rose by an average of 1.4% a year, that would lead to an annual increase in the cost of goods and services in the UK of around £4,000.
“We will see the price of a gallon of petrol go up by over 3% in the next three years, that will cause inflationary pressures to rise in all parts of the economy,” he told The Independent.
Dr Gorman said that the price increases in the first three years of the cap could be even more damaging, as they would be offset by the rise in inflation.
“The price of petrol in the second year of the price cap will rise by 3% or 4%, which will lead to a reduction in income and an increase in unemployment.”
In other words, it will lead the average worker to pay more than they would otherwise be.
“Dr Gordan said that this could lead to higher unemployment in the long term.”
People will be in work longer because they will be paying more for gas,” he said.”
It is likely to be a longer period of unemployment, which will be reflected in inflation.
“The price cap is set to be introduced by the UK government on April 1, and will impose a cap on gas prices from April 2020.
Gas prices have been rising by around 4% a day this year and could increase by an additional 2% a week by the end of the year, according to GasBuddy, which provides an average hourly price for UK consumers.
This article first appeared on The Independent and is reproduced here with permission.