Why is inflation so high in the UK?

bonana567

And what do you think will happen to the inflation level in lets say, a year's time?

Reply 1

therealOG

Cost push inflation innit. That and the increase in the money supply through quantative easing.

Reply 2

The Polar Dude

according to my econ class
its cost push inflation and other external factors which we cant control

Reply 3

CalB92

The price of everything has been soaring in recent months. Oil has pushed petrol up about 23p higher than 6 months ago which pushes food and clothing prices up then the transport companies have to put their prices up just to keep afloat.

The Government didn't help by putting VAT up to 20% either.

They say inflation will come back down to 2-2.5% next year but I doubt that, prices would have to come back down and stay down and that doesn't look likely with fuel predicted to be £1.50+ per litre within a few months, again pushing the cost of everything else up with it,

(edited 13 years ago)

Reply 4

Acerbic

VAT rise is built in, and oil prices have risen.

Reply 5

Dekota-XS

Inflation will keep rising regardless of what the politicians say. Government has no or little control over inflation.

Reply 6

Elasticity

World demand for food, oil and metals is increasing, their prices go up. We import this stuff so have little control over it.

Reply 7

Iqbal007

People have no reason to save due to low interest rates, its cheap to borrow then before, therefore people are spending more, demand goes up which supply cant meet, so price goes up. Also people are buying more imports causing import penetration, it mayb imports r getting more expensive and that our demand for imports are very inelastic.

Reply 8

danny111

Original post by CalB92

They say inflation will come back down to 2-2.5% next year but I doubt that, prices would have to come back down and stay down

you do realise that inflation of 2% still means prices going up on average by 2%.

I don't understand what you were trying to say here?

Reply 9

yoyo462001

Original post by danny111

you do realise that inflation of 2% still means prices going up on average by 2%.

I don't understand what you were trying to say here?

Sorry but I'm going to need some proof of that!

Reply 10

danny111

Original post by yoyo462001

Sorry but I'm going to need some proof of that!

http://en.wikipedia.org/wiki/Inflation

Reply 11

yoyo462001

Original post by danny111

http://en.wikipedia.org/wiki/Inflation

Still not swayed. I don't believe Inflation is equal to its definition :naughty:

Reply 12

turn and fall

All the money that was printed though Quanititative Easing is now sloshing around in commodities markets which is pushing up prices.

That is my reckon.

Reply 13

Tempa

The reason is that the demand for raw materials and commodities such as oil or gas is on the high. Simple economic theory would tell you that as demand increases, so does the price. The fact that we use all these raw materials and commodities, we as in the business in the UK and the people in 1 form or another (as the final product or the raw material) means that we also have to pay these higher prices. The source of the higher demand is coming from the emerging economies such as India and China. Not to mention the fact that there is a limited amount oil left in the world.