Consumer price inflation in Britain should peak at 18 percent in early 2023, Citi U.S. Bank economist Benjamin Nabarro said, raising his forecast once again in light of the latest energy price spike, Reuters reported.

"The question now is what policy may do to offset the impact on both inflation and the real economy," Benjamin Nabarro said.

The last time consumer price inflation exceeded 18 percent was in 1976.

According to Nabarro, Liz Truss, candidate for Britain's next prime minister, is likely to adopt measures to support households that will have a limited offsetting effect on overall inflation.

With inflation now set to peak well above the Bank of England's forecast of 13% in August, its Monetary Policy Committee is likely to conclude that the risks of more persistent inflation have increased. "This means getting rates well into restrictive territory, and quickly," Nabarro said.

"Should signs of more embedded inflation emerge, we think Bank Rate of 6-7% will be required to bring inflation dynamics under control. For now though, we continue to think evidence for such effects are limited with increases in unemployment still more likely to allow the MPC to pause around the turn of the year," he added.

Nabarro said he expects the U.K. retail price index, which is used to determine inflation-linked bond yields, to peak at more than 20%.