High inflation rate in the UK, after Brexit

Highinflation rate in the UK, after Brexit

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Highinflation rate in the UK, after Brexit

Therehave been numerous concerns about the increasing annual inflationrate in the United Kingdom, over the past few months. According toeconomists and researchers, the inflation rate has hit 1 percent, itshighest since November 2014[ CITATION Cun16 l 1033 ]. Moreover,the cost of living is anticipated to rise consistently over the nextmonths and most likely to hit around 3 percent[ CITATION Cun16 l 1033 ].The hike in prices has affected items such as clothing, hotel costs,alcohol, and motor fuel, among others. Economists claim that theBrexit Vote has adversely impacted on the UK’s economy throughincreased consumer prices. However, the Britain government had put inplace the QE stimulus programme to counteract possible economicdownturns. The essay seeks to determine the primary cause of risingconsumer prices in the United Kingdom, just after the Brexit vote.

Accordingto the Office for National Statistics (ONS), the increase incommodity prices has nothing to do with Brexit effect. On thecontrary, the International Monetary Fund (IMF) and the Bank ofEngland projected increase in consumer prices to at least 3 percent,above the estimated government’s rate of 2 percent by 2017[ CITATION Cun16 l 1033 ].Various factors have been associated with the rising prices includingthe EU referendum.The Brexit move by Britain has impacted on the value of the poundwhich has been reflected in the skyrocketing prices. Real incomes areexpected to fall if the prices continue to escalate. As a result ofthe weaker pound, inflation rates are likely to push upwards in thecoming months. The Bank of England has reinstated its QE stimulusprogramme back in the right course thus consumer prices are expectedto be regulated.

Reference

Cunningham, T. (16, October 2016). Pound spikes after UK inflation hits highest level since November 2014 after Brexit vote. The Telegraph, 1-12. Retrieved from: http://www.telegraph.co.uk/business/2016/08/16/ftse-100-skids-and-pound-creeps-higher-ahead-of-first-post-brexi/