Sneaking past the government’s inflation target for the second time this year, inflation soared to 3.4 percent in March. According to the Office of National Statistics, this dramatic increase can be attributed to the rise in prices of fuel, transport and food and energy.
The surge has beaten the expectations of most economists who had forecasted the inflation levels to hit 3.1 percent, only slightly above February’s figure of 3.0 percent.
Head of the UK trading desk at Travelex, Mark Bolsom stated that the price of imported goods was being driven up by weak pound rates and soaring energy prices. According to him, this situation only contributes to more analytical pandemonium, as UK is an import-based economy, on one hand, and the country calls for weaker pound to enhance its export-led growth, on the other.
Bolsom added that the present conditions question the relevance of Bank of England’s prediction that inflation will recede on its own. He strongly believes that the market will need the intervention of policy makers to help fight the pressures of inflation.
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