Oil prices could continue to put upward pressure on inflation
UK inflation more than doubled in April amid rising energy prices and increased costs of clothing.
It has risen from 0.7% in March to 1.5% in April, confirming that prices have been at the highest level since March 2020, the start of the coronavirus pandemic.
According to the National Bureau of Statistics (ONS), the rise in oil prices has caused a rise in gasoline prices.
Gasoline prices are currently at their highest point since January 2020.
“At the current level, inflation is not something to worry about, but there is growing concern that the financial and financial response to the pandemic is moving further down the road and owning the scary species of inflation scare.”
“At this point, the Bank of England has rejected a rise in consumer prices last spring as a natural bounce from the depths of the pandemic. However, the economic recovery is a Trojan horse and central bankers. You could be smuggling inflation just below your nose into the UK,” says Reis Caraff, financial analyst at AJ Bell.
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According to Khalaf, oil prices could continue to put upward pressure on inflation.
“Most of the inflation last year can be explained by oil prices, which rose from a low $20 $20 per spring last year to around $70 today. When we start laps for the summer of 2020, this effect is It will ease, but even if oil prices remain intact, they will continue to put upward pressure on the headline rate of inflation for the rest of the year.”
“And further prices could rise as the global economy begins and demand recovers again,” Khalaf added.
The UK is still behind the US, with the latest inflation reading of 4.2%, and CPI inflation is still below the Bank of England’s 2% target.
“The banks have revealed that they will tolerate inflation that will raise targets modestly without triggering interest rate increases. However, if inflation appears to gain a significant foothold, the market will not be able to deal with the problem. “We’ll take the hand and raise borrowing costs across the economy. The fear of inflation is already beginning to permeate the market, with gold leaf growing by 0.9% from 0.2% earlier this year,” commented Khalaf. did.
Two weeks ago, the Bank of England said it expects UK inflation to exceed its 2% target and reach 2.5% by the end of 2021.
