http://www.bbc.com/news/business-36023527
According to the Office for National statistics, UK inflation rate rose to 0.5%. It is below the target inflation rate (2%) set by the Bank of England. They expect it to remain well below 1% this year. The reason of a raise in the rate was because the raise in price of airline tickets, clothing and footwear. This influence was balanced out by the fall in food prices, along with the small raise in the petrol prices.
Even though the rates increased, this did not affect the Monetary Policy committee much and the trend remains weak. A vote was taken between the members of the Monetary Policy committee to freeze the rate to 0.5% and let it be like how it has been for the past seven years. This in turn could have an impact on the economic growth. After calculations, GDP may expect to slow down to 0.4% from 0.6%.
Though there has been a shift in inflation, since it was primarily the Easter season that did this, how impactful will it really be? Additionally, as the article points out, the rise in airfares was offset by the fall in food prices and rise in petrol prices.
ReplyDeleteI agree with Michael in that this is such a small change and one that reflects a very short period of time so it is hard to say how meaningful the number actually is. It is interesting that they are trying to freeze the rate at 0.5%, which seems very low.
ReplyDeleteI agree with Chris, 0.5% seems very low. Also 0.4% GDP growth seems extremely low too. I guess different countries prefer different ways of managing their economy.
ReplyDeleteThe year started off shockingly with oil and china going bizarre. But it does seem that the world has steadily found growth again. This inflation shouldnt be too much of an issue.
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