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UK Inflation Rate

The inflation rate in Britain overshot the Bank of England’s target of two percent in October, which seems to suggest that the pressured economy is nowhere near healing itself, as previously hoped. According to the Office for National Statistics, prices raised to 2.1 percent this last year, which is a significant jump from the previous 1.8 percent. Even more alarming is the .5 percent monthly raise in price that has been happening on consumer goods.

After a year of already high prices, the prices for gasoline, food and air travel rose even further and the results of this far outweighed the efforts by consumers to consume less energy and the subsequent lowered energy bills. An economist for the Bank of England dashed the hopes of people who thought there might be an interest cut coming at the end of the current year. According to this economist, the Bank just can’t afford to cut back on the inflation rate. The price of consumer goods will continue to rise over the rest of this year and the next due to the costs of food and energy.

A representative for one of the largest fresh milk providers in Scotland has said that the profits from the first half of the year rose by fifteen percent once the company had passed the production costs of the company on to the consumers. This means that people are going to have a rough time with the prices of food and commodities for a while longer.

The inflation of retail prices has increased to over four percent; say the reports made by the statistics office. This “core” inflation was rid of the costs of alcohol, tobacco, energy and food and was then able to match a nine month low of one and a half percent.

The service industries, ranging from the airlines to the banks, as well as the major portion of the economy had their slowest growth in the last four and a half months during the month of October and factory production had its slowest month in September. The price of housing fell to the lowest it has been in more than two years. None of these are good indicators for the future of the United Kingdom’s economy.

Many policy makers think that the economic forecast will be better predicted once the banks release the quarterly forecasts. Inflation might be very well calming down, but some economists aren’t very hopeful. If the inflation rate does weaken, it will be mostly because the economy is slowing down. If the economy continues to slow down, the interest rates might get cut as early as February.

Times are not looking up just yet for consumers. They are being forced to reimburse companies for the cost it takes to make the products they use the most. While some markup for this is to be expected, if consumers have to shoulder the entire burden, it is not likely that the rate of consumerism is going to rise any time soon.

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