Many economists of UK feel that the inflation expectations by the public had greatly affected the price of requisite commodities such as petrol, gas and bread. Bank of England (BoE) is also concerned about the projected high inflation levels and the outlook of the public. Bank of England is already struggling with sluggish growth rates and mounting prices. Now, the public’s presumption that the inflation would be around 3.3 percent in the near-term had sent the current inflation levels to 3.9 percent.
The retail price index (RPI) was around 4.1 percent during January and the cost price index (CPI) inflation was 2.2 percent during this period. However, these figures confirm that the interest rates on mortgages and other loans will not come down that much easily. BoE had cut two quarter-points and hence retained the standard rate around 5.25 percent from December. So, at this time the economists believe that the Bank’s anxiety has balanced the economy in spite of its growth fears. On the other hand, many Bank policymakers are of the opinion that the changing prices of essential commodities will worsen the state of affairs further and it may lead to additional price hikes and more pay expectations by the workers. |
