Could rising energy costs alter the UK inflation landscape forever
Description
U.K. inflation rose to 2.3% year-over-year in October, above the Bank of England's target of 2%. The increase resulted from higher energy costs and persistent inflation in the services sector, which comprises about 80% of the economy. Following this rise, the Bank of England raised its main interest rate to 4.75%, marking the second increase in three months. Bank Governor Andrew Bailey noted that rates are unlikely to decrease soon, influenced by new budgetary measures from the Labour government. These measures may lead businesses to raise prices, sustaining inflation into the next year. Global inflation remains unpredictable due to geopolitical tensions and economic policies, including potential tax cuts and tariffs planned by U.S. President Donald Trump. Central banks globally have increased borrowing costs since the pandemic began, responding to supply chain disruptions and rising energy prices.
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