Inflation average has gone
beyond government rate of 2%. The inflation rate is currently at 3.5%, and is
expected to remain for a while.
The high inflation has flinched
household spending and has left erosive effects the country’s economy. There are
hardly any chances that this situation will drop in the next 5 years.
Food prices have risen by over
40% in just about 6 years since 2007, and consumers are struggling to cope with
the costs.
However, Bank of England’s
policy could have helped the situation as Carol Astorri says, “it was a right
decision for the bank of England to allow inflation to go high and thus avoid
tightening monetary policy.” She further said, “the alternative could see
interest rates above 3.5% by 2011, making it more harder for recovery so much
earlier. ”
There are expectations that
prices may rise to up to 3% by summer, and could fall to 2.5% during autumn
when food prices and energy costs normalize.
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