UK Inflation set to soar to 4% by late 2017

UK Inflation set to soar to 4% by late 2017


Welcome to illuminati silver, we tell you
the truth about silver. Today is Wednesday 2nd November 2016 and we
are briefly addressing the issue of rising inflation in the United Kingdom.
Many analysts and economists have predicted that the UK’s exit from the EU will not
only result in a lower value of sterling, but also a rise in inflation.
An article published by the BBC today states that a leading think tank has forecast UK
inflation will quadruple to about 4% in the second half of next year and that disposable
incomes will be cut. The National Institute for Economic and Social Research (NIESR) is
the UK’s oldest independent economic research body and was founded in 1938. It quotes:
“The rise in prices will accelerate rapidly during 2017 as the fall in sterling is passed
on to consumers”. The revised figure is sharply higher than
the 3% it forecast in August. Growth too will be adversely affected. NIESR predicts that
the economy would expand by 2% in 2016 – but would fall to just 1.4% growth next year.
Dr Angus Armstrong, director of macroeconomics at NIESR, told the BBC’s Today programme.
“Households have really got a choice. Do they spend less or do they start saving less? … Given
the savings ratio was at its lowest level since 2008, the most likely scenario is that
they spend much less, hence the weaker [growth] forecast for next year.”
Consumer Price Index inflation rose to 1% in September, up from 0.6% in August, the
Office for National Statistics said last month. That was the highest rate for nearly two years.
On the positive front, the think tank also predicts that inflation would only return
to the Bank of England’s target of 2% in 2020. The question to ask of course is simply; that
if inflation does rise to 4% can it be reduced again without raising interest rates, and
if not, then what further damage to growth will occur if they are raised? Something to
ponder in the US too, should the dollar come under selling pressure for whatever reason.
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