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Could increased producer prices fuel inflation?

As we covered earlier today, the increase in UK producer prices has accelerated to the fastest rate in 14 months amid concerns that inflation could be fuelled and become a problem in the short to medium term. It is believed that the recent depreciation of sterling against the likes of the dollar and the euro have added to the cost of producing goods in the UK hence the increase in the Producer Prices Index.

While the 4.1% increase in the Producer Price Index, in the year to February 2010, is alarming it will not necessarily filter straight through to the inflation figure. If demand for products in the UK does not increase then it is highly unlikely that retailers will be able to push through similar price rises for their goods. It has almost bizarre to think that the cost of producing goods in the UK is rising at the fastest rate for 14 months at a time when many UK businesses and many UK consumers are struggling to survive.

This ongoing recession is one of the strangest and most difficult to predict in living history and one which many people hope they will never see again!

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