Top three inflation-proof stocks to watch now

Highlights

• According to Goldman Sachs, inflation levels in the UK may surpass 22% next year.
• Since early July, the wholesale gas prices in the UK have soared by a whopping 145%.
• Ofgem is raising the energy price cap from 1 October, which would further hurt the households struggling with rising bills.

Inflation levels have been soaring in the UK, further escalating the cost-of-living crisis. According to US-based investment bank Goldman Sachs, if energy costs continue to follow the upward trend, the UK inflation levels may surpass 22% next year.

On Monday, a research note from Goldman was released with the headline saying that inflation could hit 22.4% and GDP could fall by 3.4% if energy prices maintain surging at their existing rate.

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This came after the UK households were already hurt with an estimated 80% rise in their energy bills over the upcoming months, lifting the yearly bill of an average UK household from £1,971 to £3,549 ($4,197), further intensifying the prevailing cost-of-living catastrophe facing the country.

Since early July, the wholesale gas prices in the UK have soared by a whopping 145%. To stay in line with the rising costs, UK’s energy regulator Ofgem is raising the energy price cap from 1 October, which would hurt the households struggling with rising bills. Unlike households, energy supply to businesses isn’t even regulated with such a price cap, which makes them worse off.

Ofgem is expected to revise its price cap yet again in three months. But Goldman has claimed that if prices continue to be steadily higher, there’s a likelihood of another 80% hike. Amid inflation levels, investors can keep an eye on inflation-proof stocks offering good returns.

Kalkine Media® explores the following inflation-proof stocks that UK investors can consider.  

Shell plc (LON: SHEL)

The market cap of the British company focused on oil and gas production, Shell plc, stands at £166,616.30m, and it falls under the FTSE 100 index. SHEL shares were trading at GBX 2,281.00, down by 0.39%, at around 8:00 AM (GMT+1) as the market opened on Thursday. Enjoying a low P/E ratio of 5.60, the company presently offers investors a yearly dividend yield of 3.7%. Shell’s Eps (earning per share) stands at 2.59, giving returns of 58.29% and 39.72% to investors on a one-year and YTD (year-to-date) basis as of 1 September, respectively. 

BAE Systems plc (LON: BA.)

The market cap of the UK-based enterprise focused on arms, security, and aerospace, BAE Systems plc, stands at £24,283.70m, and it falls under the FTSE 100 index. BA. shares were trading at GBX 768.40, down by 1.01%, at around 8:00 AM (GMT+1) as the market opened on Thursday. With a P/E ratio of 18.01, the company presently offers investors a yearly dividend yield of 3.3%. BAE System’s EPS stands at 0.55, giving returns of 35.15% and 39.61% to investors on a one-year and YTD basis as of 1 September, respectively. 

BP plc (LON: BP.)

The market cap of the UK-based oil and gas supermajor, BP plc, stands at £83,123.53m, and it falls under the FTSE 100 index. BP. shares were trading at GBX 439.55, down by 0.44%, at around 8:00 AM (GMT+1) as the market opened on Thursday. The company presently offers investors a yearly dividend yield of 4.3%. BP’s EPS stands at 0.38, giving returns of 47.94% and 32.97% to investors on a one-year and YTD basis as of 1 September, respectively.