U.K Inflation is Higher than Expected at 8.7% recently and it is going to be a very big problem for The Bank of England to tackle it.
This is happening for the last few months consistently that inflation is rising and it is more than the predictions for the last three months consecutively.
For the month of April 2023, economists surveyed by Reuters and it was predicted that the inflation to fall to 8.2%. Similarly, the Bank of England expected it to fall to 8.4%.
All the predictions have been proven wrong and it even rising and currently it is 8.7%. Typically, the annual inflation rate is calculated by the change in average prices in comparison to the same month in the last year.
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According to the economic experts, this sticky inflation will stay there and it will not be easy to handle it. The rise of inflation in U.K is now a consistent feature for last one year or so.
The economic experts also nominate one of the reasons of this rising inflation in U.K. is exponentially increased foreign students and residents in the last couple of years.
It is also in the reports that now onwards The Bank of England (BoE) will have to think seriously to come out of this shell, otherwise it is going to high U.K. economy quite seriously.
According to the reports the core CPI for the food and energy items is rising and now it is staying at 6.8%. This rise is around 1.3% MoM that is the highest monthly increase ever in the history.
In U.K., the Food inflation is already running at an unacceptable rate of 19% and it is becoming very hard for the citizens to maintain their households.
According to the Bank of England “We expect inflation to fall quite quickly, to around 5% by the end of this year and then meet our 2% target by late 2024″.
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It was the expectation of the Bank of England that inflation will be lower down however, it is rising and in the month of May, it is more than the expected threshold defined by the Bank of England.
The experts say that first reason that inflation will go down is falling prices of the wholesale energy. Though customers in U.K. has not for relief in the utility bills yet.
Additionally, the price of imported goods is also expected to fall in near future. Since, the businesses are getting ease in production facilities.
In the recent times, the interest rate in general is highest at the 5.5% that is quite higher than the previous expectations.
The Bank of England has fixed the interest rate 4.5% and to achieve this BoE will need around 25 billion pounds in June to control this rising inflation.
