Bank of England confident inflation will fall
Paul Tucker, the deputy governor of the Bank of England, has today reiterated the Bank of England's view that inflation will not be a problem in the short to medium term. Despite last month seeing inflation spike to 3.5%, well ahead of the government's 2% target, it seems that a number of factors could come together to bring inflation down in the short to medium term. So what are these factors?
In truth the return to a 17.5% VAT rate had an unfortunate impact upon the rate of inflation, although this is unlikely to be long-lasting, but there are issues which will release the pressure on inflation. The Bank of England also believes there is significant spare capacity in UK economy with many companies running well below capacity. As and when the economy does recover this additional capacity should be available without placing pressure on prices or wages. As a consequence, while the Bank of England is not discounting the threat of inflation, there seems to be a growing confidence that the 3.5% spike will be a short-term event.
Analysts and economist in the UK are praying that the Bank of England is correct because another bout of serious inflation could ruin the UK economy.
Share this..
Related stories
Young fraudsters on the rise
28/07/2014 The cost of fraud committed by people aged 26-35 increased by 285% during the first half of 2014, according to a report by accountancy company KPMG. Fraudsters in this age group conned their victims out of £62m in the six months to July 2014, meaning there could be a shift in who the stereotypical con artist is. The research suggested that fraudsters are getting younger due to...
Read MoreGovernment introduces flexible working hours for parents
In a move which has been welcomed by parents, but received a very lukewarm response from business, the UK government has extended current guidelines regarding flexible working for parents. Currently, parents with children under six years of age are able to approach their employers about flexible working hours although this has now been extended to those with children aged 16 or under.
Read More
UK retail sales figures disappoint
Just as momentum was gathering behind hopes of a recovery in the UK economy in the short to medium term, it was revealed that retail sales in November fell by 0.3% month on month. This is a significant difference to the 0.4% increase forecast by many analysts and coming on top of October's 0.6% rise (which was revised upwards from 0.4%) it is a bitter blow to the sector. Year on year sales in t...
Read MoreGraduate market struggling with excess of competition
The UK employment market is struggling to provide sufficient employment opportunities for recent graduates with figures suggesting that 270 students are competing for each and every graduate job in the UK. In many ways this is a nightmare scenario with a 15% increase in graduate numbers compared with two years ago, because of the recession, a record number of graduates qualifying this year and a b...
Read MoreDow Jones lifted by retail sales
The main share index in the United States climbed to another record high yesterday after news of strong retail sales reassured investors.On Wall Street the Dow Jones industrial average closed up more than two per cent, with the stock market also cheered by developments in the mining sector.After jumping 283.86 points the index finished on a record 13,861.73 points its strongest daily gain s...
Read More