FRI, OCT 22 2021
Link: https://edition.cnn.com/2021/10/22/economy/uk-inflation-5-bank-of-england/index.html
What happened?
The UK is concerned that the inflation could reach 5% next year, while the Central Bank’s target is 2%. It happens because of a product and labor shortages. That is the consequence of the coronavirus pandemic and now energy price hikes.
Whom and where It affects?
It affects the UK economy and soon could have consequences on international relationships. For example, British consumer goods giant Unilever (UL), that operates all over the world, hiked prices in September. On the other side, the main population of the UK can be damaged too, because of the rising prices and high unemployment rate.
What sort of public of private institutions are involved?
Starting with public entities, we find the Bank of England, of which one of its main economists informs us about the seriousness of the economic situation in the United Kingdom due to the shortage of products and labor. On the other hand, in the private sphere we highlight the Office for National Statistics, which tells us about the economic stagnation of the United Kingdom and its GDP.
Why is it important for banking and finance?
Economists worry that the United Kingdom may be entering a period of «stagflation» characterized by weak economic growth and rising prices.
The worsening product and labor shortages will put the brakes on the economic recovery at the same time as higher energy prices drive up CPI inflation.
What do you think will be the consequences in the foreseeable future?
Currently, it is already having importance in the economy due to the bottleneck in the manufacture of all kinds of products, where society demands more than factories can manufacture. This situation is applicable to any product such as energy, where we are seeing its price increase day after day. Therefore, we can foresee that prices and inflation will continue to rise with no possible solution in sight.
Keywords: Stagflation, CPI, ONS, Inflation, High Unemployment Rate.