Is inflation making a comeback?
Economic figures this week are set to show that inflation has rebounded from recent lows with concerns it could become a major issue in the medium to longer term. Depending upon which inflationary measure you use, the UK rate of inflation has been negative or just above zero for some time but with UK base rates still at 0.5% there is a feeling that the increase in the price of oil and other elements of the inflation formula could be coming together to push inflation back into the limelight.
In simple terms, inflation reduces the power of the pound in your pocket and leads to increases in wages, costs and other elements of the economic environment in the UK. If left unchecked, and indeed lending is available at rock bottom prices, it can literally ruin an economy even in the early stages of recovery. Therefore the UK government need to find a balance between low base rates, wage restraint and the containment of inflation. Contrary to popular belief, controlled inflation is actually a vital element of a growing economy but if it is left to rise out of hand it can be very difficult to bring back under control.
Even if the economic figures to be released this week show that inflation is coming back to life, it is unlikely that UK base rates will be affected in the short term.
Share this..
Related stories
Olympics fail to Provide Economic Boost
Analysts have delivered a blow to the hopes that the Olympics would provide the UK with a major economic boost, after it was claimed that the event had not returned significant financial gains to the UK, after £9.3bn was spent in preparing for, and running the games. The construction sector did reap huge benefits from the preparation for the Olympics, and the games also provided a good chance...
Read MoreUK credit card fraud falls by 23%
Credit card fraud in the UK fell by a dramatic 23% in the first half of 2009 with £232.8 million stolen by thieves against £304.2 million in the first six months of 2008. It is believed that a mixture of improved detection systems and new scams in different areas of the economy were behind the impressive fall. However, even though credit card fraud has fallen we all need to be on our guard in th...
Read MoreSwinton insurance hit by regulator censorship
Insurance broker Swinton has today revealed a £770,000 fine from the Financial Services Authority (FSA) in relation to techniques used to sell Payment Protection Insurance (PPI), one of the more controversial insurance policies of late. It has also been revealed that Swinton will be repaying PPI premiums to 350,000 customers who automatically had PPI added to the cost of their insurance during a...
Read More0.9pc growth in Q3 for UK economy
According to officials, the UK economy saw a 0.9% growth in the third quarter of this year. This figure fell just short of the 1% that had been previously estimated. The Office for National Statistics (ONS) stated that although July-September presented a period of strong growth, output into the economy remains 3% lower than where it stood before the recession. Output from the services and ma...
Read MoreIs the UK government being held to ransom by the banking sector?
As news that 80,000 Royal Bank of Scotland members of staff are set to sue the government over their bonus scheme continues to filter into the market, there is a feeling that the UK government is being held to ransom by the banking sector. Despite the fact that banks in the UK have literally been saved from receivership by the billions of pounds pumped into the industry it appears as though bankin...
Read More