Is inflation beat?
The news that Producer Prices in April increased by just 0.3%, against a 1.6% rise in March, has been welcomed by economists. This would appear to show that potential inflation fears may well have been over exaggerated and indeed the UK economy is now consolidating therefore hopefully taking pressure off prices. Inflation was becoming a major problem for many analysts in the UK with an increase in prices due to external factors.
Hopefully inflation has now peaked and should start to weaken in the latter part of 2010 thereby increasing the real spending power of consumers in the UK. If inflation does weaken, as many expect, this will be a feather in the cap of the Bank of England which has for some time expressed an opinion that inflation would fall back in the second half of 2010. This forecast was ridiculed by a number of analysts who were uncertain about the direction of inflation in the short to medium term.
Despite a number of difficulties, both within the UK and out with the UK, the UK economy has remained relatively strong since pulling away from recession in the latter part of 2009. However, there are many potential problems on the horizon, some which may come to fruition and others which may fade away, that could have a significant impact upon not only the UK economy but the worldwide economy.
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