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Families across the UK are facing one of the toughest winters in decades as record levels of inflation and soaring energy bills combine to exacerbate the cost of living crisis.
The BoE said they expected the recession to last five quarters, making it the longest since the financial crisis.
They also said real household incomes will drop for two years in a row, the first time this has happened since records began in the 1960s.
Watch: Bank of England predicts 13% inflation and recession as interest rates rise
Incomes will drop by 1.5% this year and 2.25% next year, under current BoE predictions.
Bank Governor Andrew Bailey said the runaway costs are largely due to the soaring price of energy, as the fallout from Russian President Vladimir Putin’s war against Ukraine forced gas prices skywards.
Current forecasts suggest the crisis will peak around October this year, just as winter sets in.
These three charts explain why this winter will be such a struggle:
Each month the BoE releases its current inflation prediction and throughout the year each subsequent prediction has been higher than the last.
Current estimates now predict inflation will not start to fall until early next year, compared to the end of this year under the previous predictions.
The estimate now predicts inflation will peak at 13.1% compared to the previous estimate of 11% from last month.
Inflation is hitting the poorest families the most because the cost of some core staples like food is rising much faster than the average.
The rising cost of petrol and energy is also hitting already stretched budgets hard.
The biggest factor in the current crisis is the rising cost of energy bills.
Current estimates predict the price of energy will be three times higher this winter than last winter.
Some predict it may cost £500 to heat a home in January.
This also impacts the private and public sector as well, with many businesses that use large amounts of energy seeing their costs soar.
The sharp rise in the cost of gas is to blame for the increase in the price of bills.
The price was already increasing heavily towards the end of last year as the world turned back on after COVID came mostly to an end but it was made drastically worse by the war in Ukraine.
Much of Europe relies heavily on Russian gas for their energy supply, but Moscow has heavily restricted its exports to the continent in retaliation to the sanctions placed on them.
Although the UK only gets a small amount of its gas from Russia it is not immune to the sharp rise in the wholesale price that has been caused by the turmoil in Europe.
In response to spiralling inflation, the BoE hiked interest rates from 1.25% to 1.75% on Thursday - the single biggest increase in more than 20 years.
This means that mortgage holders on variable tracker mortgages will see their costs rise by roughly £50 a month, according to industry analysis.
This adds up to an extra £605.16 in mortgage costs over the course of a year.
The BoE is also expected to increase interest rates again next month, adding more costs to mortgage holders.
On top of this, millions more mortgage holders are due to have their fixed rate term expire over the next year and will see their monthly costs increase.
With the costs of mortgages rising, it will fuel the increasing cost of rent as many buy to let landlords pass their costs onto their tenants.
The stark warning from the BoE about the duel crisis of inflation and recession will be difficult for the new prime minister to grapple with.
Lizz Truss and Rishi Sunak have offered radically different solutions to the crisis, with Sunak saying inflation must come down first before support can be offered and Truss saying families need support now.
Both will have significantly less wriggle room within the government's finances than they originally hoped with the looming recession set to decrease tax income.