Inflation Expected To Rebound In the UK after Brexit Hit
The British Pounds has already hit an all-time low after the Brexit. This has resulted in price hikes. Mark Carney, the chief of the Bank of England has warned that inflation in the UK will rebound soon due to the increase in prices. While addressing the Treasury Select Committee he said that the inflation continues to rise and this can have a major consequence in the exchange rate of the currency.
The official data, however, shows that annual inflation in the UK is slowing down after experiencing a two-year high in October. Compared to the 1.0% in September, the inflation rate for the past 12 months has gone down by 0.9%. This fact is stated by the Office for National Statistics (ONS). Inflation pressure was reduced in clothing cost and tuition fees. Even Carney admitted that the inflation was lower compared to the blow experienced in October.
The ONS announced that there is no clear evidence connecting the weakening of Pounds and Brexit, which is responsible for increasing shop prices. However, Carney maintained that lack of evidence doesn’t change the outlook for the increasing inflation. The Pounds has weakened compared to both Euro and US dollar. To enable orderly transition to Brexit, Carney has determined to remain as governor until June 2019. The changes in the exchange rate of sterling could also be due to the increase in production price in recent months. The weakening of the currency continues to increase the input cost for all UK businesses.
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