Is inflation really set to make a comeback?
Today the revelation that at least one member of the MPC is concerned about the threat of inflation in the UK has focused the minds of many investors. While many believe that inflation will be subdued in the latter part of 2010 this is not guaranteed and it could become an issue for the MPC and could impact upon UK base rates at some stage.
This is a very tricky situation for the UK government and the Bank of England because ultimately if UK base rates remain too low for too long this could encourage inflation and if UK base rates rise this could kill stone dead any potential UK economic recovery. Finding a balance between these two ends of the spectrum is not easy but the Bank of England MPC consists of many experts in various areas of finance and economics and hopefully it should act as an early warning system.
Even though the Bank of England appears fairly adamant that inflation will return to its 2% target level this is in no way guaranteed. Inflation is always in the background and could potentially have a massive impact upon UK economic growth and UK economic strength in the short to medium term.
Share this..
Related stories
Cameron promises 200,000 new starter homes
03/03/2015 Prime Minister David Cameron has promised that 200,000 new starter homes will be built in England by 2020, if the Tories win this years general election. Cameron said that the extra homes will be made available to first time buyers. This is an extension on the coalition government plans to build 100,000 cut price homes specifically for people aged under 40 years. This will now be do...
Read MoreCar giant Honda announces UK sabbatical
Japanese car giant Honda has confirmed that initial plans to close its Swindon factory during February and March have now been extended to April and May as sales continue to fall and new cars continue to stack up on the forecourts. While this reduction in trading will see production halted it will also allow the group to consolidate its balance sheet and reduce outgoings for the next four months a...
Read MoreOECD warns UK government on interest rates
The Organisation for Economic Co-operation and Development (OECD) has today warned the UK authorities that an increase in UK base rates may be required sooner rather than later. The warning is based upon fears that inflation will increase in strength over the next few months which could ultimately derail the UK recovery. However, over the last few days it has become apparent that inflationary pres...
Read MoreJanuary retail sales worst in 15 years
In a bitter blow for hopes of a strong recovery in the UK economy it has been revealed that retail sales in January were the worst for 15 years. While headline sales increased by 1.2% year-on-year, the lowest increase since the survey began in 1995, actual like for like sales were down 0.7%. This compares to a year on year increase of 6% in December and a like-for-like increase of 4.2%. So what is...
Read MoreIndependent Scotland may face everyday price increases
12/09/2014 If Scotland votes yes in the upcoming independence referendum many business have advised that they may have to increase prices of goods and services in Scotland. The phone networks BT, EE, O2, TalkTalk and Vodafone are in talks about a joint statement which would refer to "the inevitability of cost increases" for operators . The shops John Lewis, Waitrose and Asda have also sa...
Read More