Ms. Dayan warned that there was also a risk of another rise in energy prices, especially as tensions escalate in the Middle East.
She added that it is possible that the bank will need to make another increase in the interest rate to 5.5% this year.
Since December 2021, the Bank of England has raised its key interest rate from a record low of 0.1% to 5.25% in an attempt to bring hyperinflation down to its target rate of 2%.
Deutsche Bank expects CPI to average 2.7% through 2024.
Ms. DeAnne said the impact of higher wage growth will continue to ripple through the economy this year.
“When you get the kind of high wage increases that we’ve seen, it impacts the entire services sector, which is a much larger sector of our economy than the goods sector,” she said.
Annual growth in regular earnings excluding bonuses was 7.3% in the August-October period, according to the Office for National Statistics.
This was more than double the rate recorded in the same period in 2019.
Three of the bank’s nine Monetary Policy Committee members voted in favor of another interest rate increase at the committee’s December meeting.