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Economist: UK-specific factors to blame for inflation rise
19/04/2007
Businesses are facing inflation-related problems because of elements which are unique to the British economy, an expert has suggested.
The recent rise in inflation can be attributed to the fact that the deflationary trends on the high street have come to an end and retailers are starting to put their prices up, asserted a former economist with the Bank of England.
Danny Gabay told BBC Radio Five Live's Wake Up To Money programme that UK retail businesses are raising prices, unlike their counterparts on the continent.
The director of Fathom Financial Consulting suggested that this poses a problem since: "UK inflation has moved from 1.8 per cent to 3.1 per cent and in Europe it's gone in the opposite direction from 2.5 per cent to below two per cent."
He added that the Bank of England's monetary policy committee needs to consider these factors when making its base rate decision in May.
Meanwhile, a spokesman for the British Chambers of Commerce has revealed that UK firms would accept an interest rate hike next month to 5.5 per cent in order to "restore credibility" in the Bank's strategies to curb inflation.
The recent rise in inflation can be attributed to the fact that the deflationary trends on the high street have come to an end and retailers are starting to put their prices up, asserted a former economist with the Bank of England.
Danny Gabay told BBC Radio Five Live's Wake Up To Money programme that UK retail businesses are raising prices, unlike their counterparts on the continent.
The director of Fathom Financial Consulting suggested that this poses a problem since: "UK inflation has moved from 1.8 per cent to 3.1 per cent and in Europe it's gone in the opposite direction from 2.5 per cent to below two per cent."
He added that the Bank of England's monetary policy committee needs to consider these factors when making its base rate decision in May.
Meanwhile, a spokesman for the British Chambers of Commerce has revealed that UK firms would accept an interest rate hike next month to 5.5 per cent in order to "restore credibility" in the Bank's strategies to curb inflation.