Inflation in England rose again last month, life in England, Scotland, Wales and Northern Ireland being on average 10.1 per cent more expensive than the previous year. Rising food prices in particular contributed to this rise, reports the UK statistical office for National Statistics.
The UK has been struggling with high inflation for some time now. This is not only caused by rising energy prices, the country is also struggling with the consequences of Brexit. As a result, not only are imported goods more expensive, many companies have left the island and their products now also have to be imported.
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Unexpected
British economists are not pricing in this latest rise in inflation. Nor are they counting on core inflation, rising prices excluding volatile food and energy prices, to rise more quickly. Core inflation is higher for a variety of reasons: firms provide higher wages and higher raw material costs. Also, the recent pound drop may have contributed to making life more expensive. After all, a weak pound makes imported goods more expensive.
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Now that core inflation is also rising, it’s even more likely that the Bank of England will raise interest rates further. Central banks are always watching core inflation; While high energy and food prices are temporary phenomena, core inflation often lasts much longer.
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